Uralkali boosts Q1 IFRS revenue 17% to $862 mln
MOSCOW. June 19 (Interfax) - Uralkali boosted sales revenue to International Financial Reporting Standards (IFRS) 17% year-on-year in Q1 2014 to $862 million, the potash miner said in a statement.
Potash sales grew 63% to 3.1 million tonnes.
Output rose 38% to 2.9 million tonnes but the average export price fell 31% to $215 a tonne (FCA). Capacity utilization was around 90%.
"After a sluggish second half of 2013, starting from January, customers returned to active buying as they sought to replenish their depleted stocks and prepare for the spring sowing season, benefiting from the favourable crop and fertiliser pricing environment. We expect the momentum to continue and global potash deliveries this year may set a new record of 58 million tonnes, growing 7% y-o-y," Oleg Petrov, Uralkali Director of Sales and Marketing, was quoted was saying.
North America also had a very strong quarter. Domestic potash sales for the first three months of 2014 increased to 2.8 million tonnes, up from 1.9 million tonnes in the same period last year. In the second half of March, delayed rail deliveries from Canada due to unfavourable weather conditions and logistical problems prompted some US buyers to turn to the barge-delivery market in order to secure tonnage for the approaching spring season. Potash demand is expected to be strong in this region in 2014 as farmers replenish declining nutrient levels in their soils after record crop production in 2013.
In Brazil, potash shipments continued to grow at record pace in the first quarter, with demand supported by increased soybean acreage while granular potash remained in short supply. Customer commitments for H2 2014 deliveries demonstrate their confidence in stable demand from the Brazilian market for 2014. In Central America, potash demand has been supported by strong coffee prices.
Spring season demand was strong in many European markets, supported by favourable weather conditions. Distributors in the region actively purchased to replenish their inventories which had been largely depleted due to their low purchasing activity in the second half of 2013. Robust demand for granular potash caused the price gap between granular products and standard products to widen. Overall, European demand is expected to remain solid in 2014, with Central and Eastern European markets demonstrating strong potash demand growth.
In Southeast Asia, the market was in a steady way, with competition among suppliers being particularly tough in Malaysia, Indonesia and Vietnam. Palm oil growers have continued to invest heavily in fertilisers to maximise returns. The region is expected to have a y-o-y increase in demand from 8.1 million tonnes to approximately 8.4-8.7 million tonnes in 2014.
At the end of Q1 2014, India cut potash subsidies by 2,000 rupees per tonne to 9,400 rupees per tonne for 2014/2015. In early April, Uralkali was the first potash producer to announce an agreement with IPL, securing sales volumes of 800,000 tonnes through to March 2015. The demand environment in India this year is expected to be supportive compared to the recent years, mainly due to the strengthening rupee. The Indian market is expected to reach 3.7-4.0 million tonnes this year.
The Russian market in January-March 2014 grew by 26% y-o-y, with increased purchases from both agricultural and compound fertiliser (NPK) producers.