Uralkali lifts demand forecast on improving potash outlook

By Yoke Wong
Published: Monday, 02 October 2017

Russian potash producer Uralkali has revised its 2017 global consumption forecast amid higher sales volume and improving demand outlook.

Increased sales volume lifted Russian potash producer Uralkali OAO’s earning in H1, and the improving demand outlook prompted the company to revise its 2017 consumption forecast.

Driven by growth in sales, Uralkali’s net revenue rose 23% year-on-year (y-o-y) to $1.095m in the first half of the year, but the company’s net profit was halved partly due to the devaluation of the Russian rouble against the US dollar.  

Meanwhile, improving global fertiliser demand has also supported higher potash production at Uralkali.

"The market environment began to recover gradually. As a consequence, the company has managed to increase the production and sales volume of the main product," said CEO Dmitry Osipov.

During the period, production volume increased 18% y-o-y to 6m tonnes potassium chloride (KCl), while sales volume rose 35% y-o-y to 6.6m tonnes.

Despite higher sales volume, the average potash price exported in H1 fell 11% y-o-y to $167/tonne on a FCA basis, according to Uralkali.  

The company has estimated global potash consumption in 2017 at 62-63m tonnes in end-2016, the improving demand outlook has prompted Uralkali to lift its original forecast by 1m tonne or 2%.

"We expect this market trend to continue until late 2017 and therefore revise our forecast regarding 2017 global potash consumption to 63-64m tonnes," Osipov said.

"Global demand prospects for the remainder of the year remain positive. Customer commitments for second half deliveries demonstrate their confidence in the positive market environment," said Uralkali.

Demand exceeds expectations

The potash market demonstrated an upward trend throughout H1 2017, when strong demand accompanied by rising prices led to robust buying activity.

Global potash shipments are estimated to have reached about 33m tonnes in H1 compared to 28m tonnes in the same period last year.

Potash demand has expanded in all regions. In Brazil, potash imports continued to grow at record pace in the first half of 2017, with demand supported by increased soybean acreage and improved farmer economics.

In North America and Europe, spring season demand was strong, supported by favourable weather conditions and restocking needs.

In China and India, H1 2017 potash imports have been more robust than previously anticipated. In South East Asia, import volumes were higher y-o-y, driven by profitable palm oil economics and more favourable planting conditions compared to the previous year.