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NC | Fertilizer Makers Cut Outputby Ben Johnson | 12-10-08 | 10:33AM | E-mail Article | Print Article
Browse Analyst Notes by Company : A B C D E F G H I J K L M N O P Q R S T U V W X Y Z All
Potash Corp. POT and Agrium AGU have joined the ranks of the numerous fertilizer producers across the globe that have recently outlined plans to curtail output heading into 2009. Potash Corp. announced it will reduce potash output by 2 million metric tons versus its operational capacity beginning in January. This follows a series of recent announcements from peers, including German producer K+S and Russia-based Silvinit and Uralkali, that they too would pull back output in the face of deferred purchasing. We believe these cuts are wise, given the current state of the market. Potash Corp.'s actions in particular are true to form, as the firm is exhibiting the exact kind of production discipline it has long touted.
Agrium has shut in production at its Fort Saskatchewan nitrogen facility and further curbed output at a number of its phosphate and nitrogen sites in North America in response to an extremely slow fall fertilizer season. The firm said there is a significant amount of inventory in North American fertilizer channels, which has resulted in a decline in the level of available storage capacity channelwide. We believe these production cuts in combination with a fairly packed channel set the stage for a very back-end-weighted 2009 as depletion in channel inventories in the spring will probably be followed by strong order patterns in the fall. This pattern is likely to be similar to what we saw in 2006 in the potash market, when drawn-out negotiations with Chinese customers resulted in stronger-than-normal second-half shipments. | |
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Potash corp & Agrium.... How will this affect...?
