First Tidal Acquisition Corp T.AAA

RE:Capacity?

[Fertiman]

With the news this morning that teh Uralkali mine may be lost it will be interesting what will develop this year.

Fertiman wrote: Interesting read... The total would be around 3.1 mmt or 4.5% of the capacity according to this report.... Not to mention a growing world market to possibly 62 mmt for potash in 2015...and let's not forget Africa growth right in Ethiopia with the ATA focusing on Potash.


We believe that potash industry fundamentals have become more favorable. Potash inventories in the United States are now (35%) below their five year average. A large Uralkali mine (Solikamsk-2) with 2.3m tons of production flooded in November. We also note that Mosaic closed its Carlsbad mine with about 300,000 tons of potash production and 500,000 tons of nameplate capacity in 2014. The effects of the 2.6m tons of curtailed or closed production represents roughly 4.5% of industry production. Prices in the industry had already moved higher through 2014 due to a favorable supply/demand potash balance. We believe the balance is now more favorable. Nameplate capacity utilization is about 77% or 58m tons of production in a market with 75m tons of capacity. However, 10 million tons of unutilized capacity is managed by Canpotex producers, which restrains production. We think operational tonnage today is closer to 62m tons in a market of 58m tons of 2014 production or roughly 93% after subtracting out the dysfunctional Uralkali capacity, the Mosaic closure and unutilized Canpotex tons. Admittedly, grain prices are lower and there is risk that potash demand is lower next year rather than flat as we expect. We expect functional utilization rates to be in the vicinity of 90% in either event. Our current EPS estimates for Potash Corp may prove conservative. Potash Corp’s investment spending is sharply moving lower: it currently has 9m tons of potash production and soon will have 17m tons of capacity. Free cash flow is rising structurally…We expect Potash Corporation to generate a 6.3% free cash flow yield in 2015 and a 7.1% free cash flow yield in 2016: Potash pays a 4% dividend.

https://blogs.barrons.com/stockstowatchtoday/2014/12/05/potashcorp-is-now-the-time-to-buy/