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
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
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
"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
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
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.