It was reported yesterday that Brazil is expected to increase its potash imports this year even as it hit a new record of 7.5 MMT last year, reflecting a 9.3% YOY increase. This means that for the second consecutive year in a row, Brazil was the largest potash importer in the world. But even as its potash consumption increases, its domestic potash production is in decline. Moreover, the downward trend will continue and its only domestic operating mine is expected to run out of ore in 2016. Brazil, not India, is where we should focus our attention.
Abba this is great news. 2 more key points when discussing the Brazil or SA market. First of all POT sells to SA through Canpotex and directly through the NB facility. This is why they are expanding/ building a new mine in NB, POT can get to Brazil faster than Canpotex therefore they don't have to share with AGU and MOS for those sales. Secondly this is 100% spot market which is good and bad. Good in the fact that the prices are higher that China or India pay, but could be bad in the fact that if they decide to turn off the tap at any point they could. Since we are now signing only 6 month contracts with China I see the spot market as an overall positive for POT.
Brazil has been and continues to be a very important customer.
There was a report out of Minsk a few days ago which said that BPC had raised its spot price for Brazilian buyers by $15.00 to $465/MT. Their CEO, Valery Ivanov, asserted that the potash market was recovering sufficiently to allow them to revise their prices for Brazilian importers even as they were obliged to cut their price in January for Chinese importers as well as Indian buyers in early February.
Although another of his comments might just be puffery, he did say that he expected prices to rise in future contracts with India and China. The only sour note coming from Ivanov was that he expects global potash sales to rise to 53-54MMT this year whereas the CEOs of AGU, MOS and POT have offered projections in the 55-57MMT range. Not sure what accounts for the disconnect.