credit suisse raises fertilizer price forecast, page-7

Thanks Quicksilva - info always welcome! The report and indeed likely increased RP world capacity is no doubt one of the big reasons that MAK's sp remains low as the bigger funds are bound to avoid the risk that such data suggest.

I havn't read the latest one from NOV but have been given the jist by a friend . CAn I ask if the main increase in supply remains Morocco and China with the Maaden project in Saudi Arabia next? The reason I have gone against the trend here is based on a belief that the concentration of supply power will remain going forward. That China will contnue to restrict it's exports of phosphate as it increasingly views it as a strategic resource, that the Maaden project will not export RP only DAP and that Morrocco will do as it has previously...exploit it's dominance and increase prices. Certainly if Morrocco want's to increase supply above demand it's stated capacity increase can keep prices low for many years. ALso does the latest one give predictions for likely resultant DAPprices? as this indicator seems to be showing a more bullish recent trend than capacity suggests already.

Certainly the idea that RP prices are off to $400/T again soon can be ruled out as long as Morrocco behaves however even a modest increase in RP prices from here say A$150/T is a huge upside for Mak from these levels and justify the investment. Mak with even a modest profit is a different animal and would be rerated according to it's ability to avoid ongoing dilution in developing Namibia and other projects alone. If it can achieve A$150/T in an offtake then instant grins alround and what would that take? Say a RP price of US110/T- add $10 for our high grade, gives US 120/T fob Morrocco = A$133/T - then given our geographical advantage of 25/T minimum would realise A$158/T before any premium for the low cadmium to countries that care about such things - Like NZ.

Basically the odds are good that this year Mak will start production at a modest profit causing a re-rate in the SP to perhaps not as lofty levels as some would hope but still a heady return on current prices. Then if RP prices climb further - and yes that is speculative short term then mak ends up going really nuts. Morocco remains the key to the really big bucks in MAK but even at current outlook Mak should be a winner this year.