Major potash producers — and the banks that finance them — are sharing their 2013 potash plans, and as China and India account for a combined 30 percent of total global potash shipments, it is not surprising that these two countries dominate the forecasts.
While projections are mixed, all sides appear to acknowledge that there is significant potential for a return to demand in 2013. The question is how and when it will arrive.
Potash producers optimisticIn mid-November, Potash Corporation of Saskatchewan (TSX: POT) announced one of the most optimistic forecasts for overall growth in 2013. At a Morgan Stanley investor conference, PotashCorp CEO Bill Doyle said that global shipments are expected to hit between 57 and 58 million tonnes (Mt) in 2013. "[W]e see that as a big improvement over this year. And we think 2014 is also going to be a strong volume year," Doyle said. Doyle noted that a return in demand from China and India — as well as rapid demand expansion in Latin America — is key to that growth. Russia's Uralkali, while confident that Chinese and Indian demand will return, is less certain about an early 2013 spike in demand. Uralkali announced this week that it will cut its potash output by half, to 2 Mt, in the December to March period. CEO Vladislav Baumgertner told Reuters that the move is aimed at reducing excess global supply during a protracted fall in demand. Baumgertner noted that "[s]tocks will be consumed by the market during the first quarter, and producers will be able to sign contracts with China in March," Reuters reported. India's stocks will also need replenishing, suggesting that new contracts could be signed as early as December. "Stocks in India are not too high and stay on usual levels - of about 1 million tonnes," Baumgertner also said.