Do potash prices stand to benefit from the strengthening of the Canpotex consortium?
The news last week that the Canadian potash giant PotashCorp had made a takeover offer for German miner K+S raised the prospect that the potash industry was poised for a period of consolidation, after two years of fragmentation.
However Credit Suisse has cast doubt on the idea that such a consolidation would drive potash prices upward, at the same time as industry sources move to allay fears of supply restrictions in Germany.
The global potash market was thrown into disarray in 2013 with the collapse of the BCP cartel. BCP constituted Belarusian stateowned producer Beleruskali and Russian miner Uralkali.
BCP and Canopotex, a consortium of North American miners of which Canpotex is the largest, maintained a duopoly on potash for decades, setting prices through negotiations with buying consortiums in China and India.
The collapse of BCP cartel sent potash prices downward, as Belaruskali moved aggressively to conquer new markets.
At the same time, a number of greenfield sites are in development by smaller players, whose potash production fall outside the traditional cartel system, and nonCanpotex mining giant BHP continues to expand its interest in the potash market, after having takeover offers rebuffed by PotashCorp in 2010.
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