Potash Corp. of Saskatchewan Inc., the largest North American producer of its namesake fertilizer, said it doesn’t expect a dispute between two producers in the former Soviet Union to last and that forecasts of a price slump are overdone.
Chief Executive Officer Bill Doyle said yesterday the duration of the disagreement between Russia’s OAO Uralkali and its Belarusian rival will be “shorter rather than longer.”
The comments were his first since Uralkali last week quit Belarusian Potash Co., a marketing venture with Belaruskali. Shares of potash producers around the world plunged after the Russian producer said it will start selling the crop nutrient freely in the market for the first time in eight years.
“Logic tends to prevail,” Doyle said in a interview broadcast live on the company’s website. “I don’t find too many people who self-destruct intentionally.”
Uralkali CEO Vladislav Baumgertner said last week his company objected to Chinese potash sales by Belaruskali outside of their BPC venture. He said the price of potash, which helps strengthen plant roots and improve resistance to drought, may now plunge to less than $300 a ton as Uralkali moves to full production to gain market share. The last potash supply agreement between BPC and China was at $400 a ton.
Until last week, BPC and Canpotex Ltd., the group that represents the largest North American potash producers, have dominated global supply by representing their members in export pricing negotiations. That has meant that the producers in each group don’t compete against each other in most export markets.
Canpotex, a Canadian company, has an explicit exemption under Canada’s Competition Act allowing it to operate.
Doyle, 63, said yesterday there have been disputes between the Russian and Belarusian companies before and that he sees no changes at Canpotex. Saskatoon, Saskatchewan-based Potash Corp. won’t follow Urakali’s new strategy of putting volume before price, he said.
“We suspect that price will at some point become more important than volume too, but Uralkali’s comments have already dramatically reduced the credibility of business as usual, or of a quick recovery in the stocks,” Mark Connelly, an analyst at CLSA Americas LLC in New York, said in a note.
Canada’s Agrium Inc. (AGU), which together with Potash Corp. and Mosaic Co. of the U.S. controls Canpotex, said yesterday that Uralkali’s strategy “has added to uncertainty” in potash.
“Time will be needed to evaluate how global producers and customers are likely to respond and what the implications are,” the Calgary-based company said in its earnings statement.
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