Uralkali Sees Weaker 2016 Market Than Biggest Rival Potash Corp.By
Company expects demand to reach 58 million to 60 million tons
Potash Corp. sees 59 million to 62 million tons for the year
The Russian company sees demand for 58 million to 60 million metric tons, down from 61 million tons in 2015, Vladislav Lyan, director of sales and marketing, told investors Monday on a call after its annual results. It’s also lower than the range of 59 million to 62 million tons Potash Corp. Chief Executive Officer Jochen E. Tilk gave on Jan. 28.
High stockpiles, used during the first half, and lower demand from top consumers China and India will curb purchases in the year, Lyan said.
In Brazil, another large consumer, growth in imports may be limited by a weak economy, Uralkali said. Market rates in Brazil, offering a guide to Chinese contract prices, fell about 35 percent in the past year to $220 a ton by April, Bloomberg Intelligence data show.
The Chinese contract price, which last year was $315 a ton, traditionally sets a benchmark for suppliers and buyers around the world. Supply deals with China and India are normally signed with companies including Uralkali, Belaruskali and Canpotex Ltd., the exporter for producers such as Potash Corp., at the start of the year.
A deal with China is expected in the first half, Lyan said on the call. There’s "uncertainty" on the timing on an agreement, Uralkali said in a separate presentation on Monday.
The company sees its own output in 2016 at 10.3 million to 11.3 million tons, depending on the market, CEO Dmitry Osipov said on the call. In 2015, Uralkali produced 11.4 million tons with an 18 percent market share. It recorded a 10 billion rubles ($150 million) in net income in 2015, turning around a loss in the previous year.
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