Thursday, August 1, 2013

Potash turmoil provides for a new twist for local development

For those looking for an easy lesson in global economics and how events in a far corner of the world can have an impact at home, we point you towards the financial pages of the world's newspapers over the last few days.

A decision in Russia, that would see a Russian potash company reportedly planning to withdraw from a marketing group in that region of the world, could signal the start of a pricing war, with suggestions that OAO Uralkali will undercut competitors pricing all while increasing shipments to the key market of China.

The Russian company which already has the lowest cost of production of any of the major potash corporations, seems set to boost their exports to China and drive the price of potash to below 300 dollars a ton.

The Russian move provided for a wide range of economic articles for review on Monday, much of it highlighting the mercurial nature of the world of potash development and marketing and what it all may mean for Saskatchewan and Canada (and by extension perhaps, Prince Rupert).

August 7-- International decision puts Prince Rupert potash terminal plans in question
July 31-- Potash's $20 billion market transformed by Uralkali
July 31-- Potash price hit will deter new projects and balance supply, Uralkali chief says
July 31-- Belaruskali to Expand Brazil Potash Sales after Uralkali Split
July 31-- Potash group eyes "long-term"
July 31-- Potash shares crushed: Is Russian cartel dead, or is breakup a 'high stakes' bluff
July 31-- Changing potash landscape a boon for China, India
July 31-- China, India gain upper hand as potash cartel crumbles
July 30-- Potash war may signal end of BHP's $15 billion min plan in Saskatchewan
July 30-- Saskatchewan government responds to possible potash price shake-up
July 30-- The growing implications of potash crash
July 30-- Potash price plunge could have 'meaningful' impact on Canada's GDP: CIBC
July 30-- Why the break up of the potash cartel is not such a big deal
July 30-- Potash price hammered as Russians may flood market
July 30-- Potash hit could cut Saskatchewan economic growth in half, economists say
July 30-- Potash plunge will 'hurt' province, expert says
July 30-- The fertilizer hits the fan: why Canada's potash cartel has lost pricing power
July 30-- Russia's potash breakup a 'game-changer' for Canadian industry
July 30-- Saskatchewan economy could take major hit from lower potash production
July 30-- Who's who in potash exporting
July 30-- Potash cartel shift sends shivers through Saskatchewan
July 30-- "The end of the potash world as we know it' is no exaggeration
July 30-- Saskatchewan economy can weather potash storm
July 30-- Shares of potash producers plunge as Russian marketing group collapses
July 30-- Towards less of a potash oligopoly
July 30-- Russia pulls out of cartel, potash prices expected to plunge
July 30-- World's biggest potash producer Uralkali breaks up cartel to grab market share on price drop

If, as seems to be the indication, potash pricing is about to collapse or take a serious hit, one imagines that Canpotex and all the other major producers will be reconfiguring their business plans, or as they might say in the mob movies, be preparing to go to the mattresses.

According to an analyst at CIBC World Markets, the potash market and the pending changes in pricing "could have a meaningful, if not massive impact on Canadian quarterly GDP data."

The impact on Saskatchewan's Potash Corporation has been particularly rough over the last little while, first from fighting off a hostile takeover and now with the stock pricing dropping earlier this week.

According to this CBC report, Potash Corporation lost roughly 50 percent of its value since the 2010 takeover attempt, which was blocked by the government. The company also has lowered its earnings forecast by roughly 20 percent last week, indicating that lower prices was the main reason for the revision to their forecasts.

What that may mean for the much anticipated, but still on the far horizon prospects of the Canpotex potash terminal remains to be seen.

There were some hopeful signs back in March that progress was on the agenda and perhaps word might soon come our way as to the nature of the corporate planning for the terminal to be constructed on Ridley Island.

It may still be on the way, or it may end up delayed as the market shakes itself out, or in a worst case scenario, there probably is at some point, even the prospect that the proposed terminal may join the list of things that could have been.

All of those options would seem to be in the realm of pending further developments.

The world's ever changing economic factors seem to be where we should be keeping our eyes focused for future signals as to where the potash market is destined.

You can review our past items of interest on the Canpotex files here, whether we have any additions to come in the near future will seemingly hinge on developments in Russia, Belarus and other distant locales.

No comments:

Post a Comment