21 march 2016

It is not a good time for selling raw materials these days. What is going on on the potash market, why fertilizer manufacturers are reducing their output, and how Belarusian Potash Company is operating in these conditions are covered by BelTA's interview with BPC Director General Yelena Kudryavets.

It is not a good time for selling raw materials these days. What is going on on the potash market, why fertilizer manufacturers are reducing their output, and how Belarusian Potash Company is operating in these conditions are covered by BelTA's interview with BPC Director General Yelena Kudryavets.

- Ms Kudryavets, could you tell us about the key achievements of 2015? What is BPC's share in the global export? How has the company's share changed in the last few years?

- In 2015 the Belarusian potash industry reported its highest share in the global export on record. According to data of the International Fertilizer Industry Association (IFA), the share of Belarusian potash in the global export reached 19.3%, up from 18.8% in 2014. According to the IFA data, in 2015 the global potash export dropped by 5.7% to 47.6 million tonnes. To compare, in 2014 the global export reached 50.5 million tonnes. Belarusian Potash Company increased its market share while preserving a balanced and responsible attitude to the market. We have always tried to keep things balanced, focusing primarily on effective sales. Thanks to that Belarusian potash export in 2015 also went up in monetary terms in comparison with the previous year.

- What market trends do you expect in the future? What is the current state of affairs on the potash market? What international events impact the potash market to the greatest extent?

- The potash market is part of the global macroeconomic system. It is a raw material market. It follows trends that can be observed on other markets of raw materials. Potash consumption and respectively potash export are directly related to the general economic situation in the world and in individual importing countries. The exchange rate of national currencies, government subsidies and loans available to farmers greatly influence sales. We've recently seen devaluation processes in Brazil, India, Malaysia, Ukraine and other countries. They certainly influence the demand and the purchasing power. Revenues of farmers have dropped as well. For the last few years prices for the staple crops — wheat, corn, soya, soya products, soya oil, sugar, cocoa, coffee, and cotton — have been falling and a slight improvement was registered only recently. Weather is also another important factor on the fertilizer market. In particular, the El Nino effect [temperature changes in the surface level of water in the equatorial part of the Pacific Ocean greatly influence the climate] has made a serious contribution. For instance, in Central America the rain period was delayed by more than two months. Severe drought was registered in South Africa. Drought greatly affected the demand in Malaysia, Indonesia, and Thailand. Due to the lack of rain the sowing of the main agricultural crops was delayed. Due to low humidity farmers had to postpone fertilizer application.

- Major manufacturers of potash fertilizers declared plans to reduce output. The Canadian company PotashCorp has shut down one of its mines. What can you say about that? Is the output of Belarusian potash fertilizers going to take a dive?

- We see what is going on in the world but our business decisions are based on our own analysis of the market. Bearing this analysis in mind, we make as much potash fertilizers as the market will buy. The joint work of Belaruskali and Belarusian Potash Company is guided by real needs of the market. We practice a responsible and balanced attitude towards production and sales of this valuable mineral. In our opinion, making products that will not sell is not a good idea since storing them costs a lot of money. This is why we keep things balanced and flexibly respond to changes of the market demand. We refrain from commenting on actions of other manufacturers. We are not inclined towards speculating about their reasons and their goals. The potash market is a cyclical one. There can be upsurges and there can be falls. We believe that the last two years was a very successful and positive period. Belarusian potash export volumes exceeded the average figures registered in 2005-2013 by over 3 million tonnes. Certainly, things will change this year since global sales on the potash market have dropped. We can say that in January-February 2016 our export dropped by roughly one third in comparison with the same period of last year. Due to low market activity we expect export to drop respectively in Q1 2016.

- How will the global demand for potash fertilizers change in the near future?

- The data we have indicates that farmers all over the world use insufficient amounts of potassium. So there is a potential for sales. Whatever may happen today, biofuel production is on the rise, population numbers are increasing, the amount of farm land per capita is falling, the middle class in developing nations is growing and switching to diets, which are rich in protein, vegetables and fruits, which need a lot of potash to grow. All these factors indicate that more agricultural products need to be made, more mineral fertilizers need to be applied, and more potash needs to be sold. IFA data indicates that in the long term the global potash market will grow by 2.5% per annum.

- What markets does Belarusian Potash Company consider promising? What is the situation in Brazil, Europe and other markets?

- Every market has its own peculiarities, its own advantages and prospects. We always try to think systemically and focus on effective sales. As you know, we sell potash fertilizers in over 100 countries and therefore can be flexible and mobile. Naturally, China, India, and Brazil are strategic markets, which state affects the global potash market situation. For instance, the Brazilian market is sending positive signals. We have noticed a considerable increase in demand in this country. We are confident that the market has become more active and hope that we are past bottom prices. Certain growth and rising prices are noticeable already. It is possible that Brazil will be the engine to encourage positive dynamics in other regions. Europe, including Western and Eastern Europe, is a traditional market for us. This market is more conservative, is less prone to shocks and our sales are steady. We cooperate with virtually all the European countries. We work together particularly actively with Norway, Belgium, Poland, Sweden, and Italy. I would like to thank my colleagues, personnel of Belarusian Potash Company and Belaruskali. Today's accomplishments have been made possible thanks to our working together, supporting each other and thanks to our vision of the common goals. I am pleased to think of employees of the two companies as one close-knit Belarusian potash team.
Read full text at: Belarusian potash has reached a record high share in global export