Post by
retiredcf on Apr 11, 2023 10:00am
CIBC Notes
EQUITY RESEARCH
April 9, 2023 Industry Update
New India Potash Contract To Stabilize
Prices?
Key Points
The new Indian standard MOP contract settled as IPL signed contracts with
Uralkali and Canpotex at $422/t CFR (a $168/t decline from the previous
contract price) until the end of September. Overall, we view this as a positive
for the potash industry as it should provide a floor for potash prices and help
drive buying activity once the market has fully digested the news.
• Potash Prices Appear To Be Stabilizing; Brazil Trade Activity
Improves: U.S. Midwest spot potash prices increased $10/t W/W to
average $440/t; Brazil spot prices remained flat W/W to average $450/t;
and Southeast Asia spot prices reset lower by $10/t to average $440/t
following the India contract settlement. Brazil saw potash demand
improve with over 300,000t of sales concluded last week.
• Belarus Ramping-up Potash Shipments, But Russian Exports
Slower Than Anticipated: Belarus railed 744kt of potash to Russian
ports and China in March implying an annualized run-rate of ~9Mt, which
is only 2Mt-3Mt lower than Belarus’ pre-sanction exports in 2020/2021.
That said, Russia’s February potash exports of 323kt is down 50%-60%
vs. February 2022/2021. Much of the increase in Belarus exports has
been enabled by lower Uralkali exports out of the St. Petersburg port.
U.S. NOLA Urea Prices Rise $30/t W/W: U.S. NOLA prices rose +10%
W/W to average $334/t, the highest it has been in eight weeks. Sentiment
was boosted following last week’s forecast of U.S. corn planting this spring of
92MM acres and tight domestic urea supply for April/May. That said,
international traders believe a rally will be short-lived as suppliers seek to
capitalize on demand and direct more cargoes there.
Methanol Prices Trending Lower: U.S. spot prices dropped ~12% W/W to
average $258/t; Europe spot was down ~2% W/W to average $340/t; and
China spot was down ~1% W/W to average $277/t. U.S. ISM Manufacturing
PMI declined to 46.3 in March 2023, the lowest since May of 2020. Overall,
spot and contract price increases remain under threat until China recovers.
Asian Caustic Prices Move Higher As Export Availability Shrinks:
Following two weeks of price stabilization, Northeast Asian caustic prices
(relevant for CHE.UN) settled higher at $370/dmt-$380/dmt fob (+3% W/W).
Despite the absence of robust demand recovery in China’s domestic caustic
soda market, domestic prices were showing signs of firming on the back of
tightened supply with more producers shutting for spring maintenance.