World phosphate, potash shipments to grow in 2018, helped by Chinese needs


Mosaic forecast further growth in world phosphate and potash markets in 2018, driven by Chinese demand, as the fertilizer giant heralded a “transformational year” for its own prospects, as investments come to fruition.

The US-based group, the world’s biggest producer of phosphate fertilizers, forecast that the world market for the nutrient will grow to 68.9m-70.9m tonnes this year, adding to growth of 1.6m tonnes to 68.5m tonnes in 2017.

Growth this year will be spurred by improvement in many major markets, including Brazil, where growth to 8.4m-8.7m tonnes is forecast, from last yaer’s 8.2m-tonne result

“Farm economics remain OK” in the South American country “despite the relative strength of the real and a deterioration of barter ratios due to lower crop prices and rising fertilizer prices”, Mosaic said.

‘Stocks run down’

In India, the second largest phosphate user, volumes will rise to 9.5m-9.8m tonnes, from 9.4m tonnes last year.

Mosaic noted that India’s stocks of phosphates have been “sharply reduced and will necessitate earlier-than-typical import purchases by Indian buyers in 2018”, foreseeing a boost too from “an expected boost to the phosphate subsidy” for growers.

In China, the top market, volumes will grow to 18.1m-18.3m tonnes from 17.9m tonnes last year, as as “a result of low channel inventories” of phosphates and “high domestic agricultural commodity prices”, which encourage farmers to apply fertilizers.

‘Shipments to rebound’

For potash, Chinese volume growth will be particularly marked – soaring to 16.0m-16.2m tonnes in 2018 from 14.8m tonne last year.

“Shipments are projected to rebound to more than 16m tonnes,” including 8.6m tonnes of imports, “due to high domestic crop prices, moderate potash prices and low channel inventories,” especially at plants producing NPK, the combined nitrogen, phosphate and potash fertilizer.

Demand in eastern Europe and the former Soviet Union was also seen showing notable growth, to 5.4m-5.6m tonnes, up from 5.2m tonnes last year, with consumption “underpinned by mostly favourable weather, strong local-currency crop prices, bolstered by still weak currencies, and moderate potash prices”.

World potash shipments were seen growing to 65.5m-67.5m tonnes, up from 65.0m tonnes last year - a more upbeat forecast than made earlier this month by rival Nutrien, which saw some potential for a flat market in 2018.

“We expect that demand will continue to be robust in 2018 and that annual global potash shipments will be between 64.0m-66.0m tonnes,” Nutrient said, pegging last year’s volumes at 64.0m tonnes.

Tax hit

Mosaic made the comments as it unveiled a loss of $451m for the October-to-December period, although that reflected a $458m charge related to US tax reforms which, in cutting the corporate tax rate, have reduced the value of assets held against payments.

Companies such as American Express and tractor maker Deere & Co have also been dragged into losses by large one-time charges on tax assets.

Excluding one-off factors, the group reported earnings per share of $0.34, ahead of the $0.28-per-share figure Wall Street had expected.

Revenues rose by 12.4% to $2.09bn, lifted by “higher realised prices [of products] throughout the business”.

‘Transformational year’

Joc O’Rourke, the Mosaic chief executive, added that group expected 2018 to prove a “transformational year for Mosaic”, thanks to factors including the purchase, completed ast month, of Brazil-based Vale Fertilizantes, in a $2.03bn cash-and-shares deal.

“The addition of Vale Fertilizantes, the construction completion of the Ma’aden phosphate project and progress on the Esterhazy K3 complex further enhance our position as a world class, global fertilizer company,” Mr O’Rourke said.

Mosaic forecast earnings per share this year of $1.00-1.50, including the 34m new shares issued for the Vale Fertilizantes acquisition.

Wall Street has forecast a $1.28-per-share figure, according to a Reuters poll.


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