Potash Corp sees no demand destruction, despite steep prices
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By: Liezel Hill
Published on 24th July 2008
Rising prices for potash had so far done nothing to diminish demand for the fertiliser ingredient, Potash Corporation of Saskatchewan CEO Bill Doyle said on Thursday.
Presenting the group's second quarter results, Doyle told analysts that the company continued to see upward pressure on prices, as global demand for fertiliser remained strong.
Prices for potash have surged over the last year, driven by rising grain and food prices.
“We believe the records we are setting today are only the beginning,” he said.
"We don't see a peak."
Global supply remains tight, with potash inventories in North America at 41% below their five year average, Doyle said.
Potash Corp confirmed earlier this month that Canpotex, the export and distribution business owned by Canadian potash producers, had increased spot prices for some Asian customers to $1 000/t and higher for product to be delivered in the fourth quarter.
“Higher potash prices have not had an impact on demand, as farmers recognise they still generate significant returns on their potash investment,” Doyle said in a conference call.
“We have the opposite problem, which is we have so much demand it is exceeding the current supply, and that looks to continue.”
To reach scientifically recommended application levels, China, India and Brazil alone would need to use an additional 25-million tons of potash a year, he said.
Potash Corp is spending billions of dollars to raise its Saskatchewan potash production capacity by almost 8-million tons a year, to 18-million tons a year, between now and the end of 2012.
"We expect these tons will be essential to global food production," Doyle said.
The group reported second-quarter earnings of $905,1-million, its highest ever and more than triple the profit of $285,7-million posted in the same period a year ago.
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