Buying Potash Now....is = to buying the bottom of the market. Talk about great timing with a whack more drill results coming in January! The window is now.....
China potash deal to stabilize prices?
Posted: December 29, 2009, 9:12 AM by Eric Lam
Mining, potash, China, Belarus, Uralkali, BPC
https://network.nationalpost.com/np/blogs/tradingdesk/archive/2009/12/29/china-potash-deal-to-stabilize-prices.aspx
After months of speculation, China finally agreed to a potash contract with the Belarusian Potash Company just before Christmas. However, an analyst with Scotia Capital forecasts China's influence on potash prices will wane in the coming years.
"For the past 15 months, the potash industry has been in crisis with many buyers sitting on the sidelines waiting for potash prices to stabilize and a price floor to be set. Uralkali believes the Chinese contract settlement should stop potash price erosion, establish a price floor, and stabilize the world potash market," Sam Kanes, analyst with Scotia, said in a note to clients.
Mr. Kane expects the Chinese contract to stimulate global demand in 2010, but notes that China's influence on potash prices is on the decline.
"[Next year] may be the last annual potash contract for China," he said. "As China's domestic potash production increases and its net imports drop, China becomes less relevant as a potash price setter."
The deal itself, for 1 million metric tonnes at US$350 a tonne with an option for an additional 200,000 tonnes, is significantly less than the US$460 a tonne order of 850,000 tonnes Russian producer Silvinit agreed to with India in June.
"After six months with little China interest due to high inventory levels, a slumping price to US$350 a tonne has raised interest," Mr. Kane said. "China's major quarterly potash consumption is Q1 when domestic production stops due to winter weather. BPC stated this buying window led to its 1 million tonne deal."
Uralkali estimates domestic Chinese potash production in 2010 to be about 5 million tonnes, with consumption at 8 million tonnes, so China will need at least 3 million tonnes of the fertilizer imported. Uralkali also forecasts 2010 global potash demand of 45 million tonnes, with some pricing upside potential.
Scotia, meanwhile, forecasts global demand of 47.5 million tonnes in 2010, and 55 million in 2011.
Eric Lam
Read more: https://network.nationalpost.com/np/blogs/tradingdesk/archive/2009/12/29/china-potash-deal-to-stabilize-prices.aspx#ixzz0b5i4T48K
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