Israel Chemicals Ltd. plunged the most on record after competitor OAO Uralkali, the world’s largest potash producer, predicted prices for the crop nutrient will fall about 25 percent after it exits an export cartel.
The shares tumbled 18 percent, the most since Bloomberg started tracking the shares in 1995, to 29.26 shekels at the close in Tel Aviv. Trading volume soared to 9.8 times the three-month daily average. Israel Corp., which holds a 52 percent stake in the maker of fertilizers, slumped 20 percent, also the most on record, to 1,680 shekels. The two stocks led declines on the benchmark TA-25 Index, which fell 1.6 percent.
Uralkali’s cooperation with Belorusian potash producer Belaruskali reached “a deadlock” after the government in Minsk canceled their joint trader’s exclusive right to export the country’s potash and Belaruskali made independent deliveries, Uralkali said in a statement. The Russian potash producer will switch exports to its own trader, Uralkali Trading, from the joint venture, Belarusian Potash Co., known as BPC.
“The development comes as a surprise which will bring down potash prices to levels that will also hurt Israel Chemicals’ profitability,” Ilanit Sherf, an analyst at Psagot Investment House in Tel Aviv, said today by phone. “Uralkali’s exit from the trade venture may also induce more competition and put further pressure on prices.”
Psagot today cut Israel Corp. to hold from buy. The yield on Israel Corp.’s 1.7 billion shekels ($476 million) of 4.7 percent bonds due March 2021 rose 10 basis points, or 0.1 percentage point, to 2.82 percent. A spokesman for ICL, who asked not to be identified citing company policy, declined to comment when contacted by Bloomberg News.
“The potash price may fall below $300 a ton after the change in our trading policy,” Uralkali Chief Executive Officer Vladislav Baumgertner told reporters today by phone.
Uralkali plans to run at full capacity after changing trading policy and will boost output to 13 million tons in 2014 from this year’s 10.5 million tons, Baumgertner said. The producer will extend its first-half supply contract with China for the remainder of 2013, meaning it will ship as much as 500,000 tons more potash to China by the end of the year, Baumgertner said.