Potash Outlook 2016: SOP Expected to Shine

For the potash market, 2015 has been a year of stagnant growth, with oversupply and prevailing weakness in emerging global economies hurting the space.
Prices for the fertilizer are currently sitting at US$282, a $15 drop from prices seen at the end of the first quarter. And with potash prices still in a multi-year slump, the odds are not in favor of a turnaround in the coming year.
Oversupply hurting the market
Since Uralkali said “adios” to its partnership with Belarusian Potash Company in the summer of 2013, the potash market has not been the same. The collapse of the European potash cartel shook the market, sending potash prices down by 25 percent and creating an environment in which sellers could more readily offload their product.
Explaining the situation this past September, Macquarie analyst Daryna Kovalska told the Financial Post that “in a ‘post cartel’ world, the producers lack the discipline to reduce supply enough to bring it in line with demand.”
Because producers are not curbing production, the biggest potash consumers — such as China — are sitting with large stockpiles of the fertilizer. That means demand, and of course prices, are depressed.
Potash companies don’t seem surprised that oversupply is such an issue. Indeed, when asked about his expectations heading into 2015, Paul Donaldson, CEO of ASX-listed potash development company Danakali (ASX: DNK), told the Investing News Network (INN) that he “expected that the potassium chloride (MOP) market would see price declines throughout the year as a result of new capacity entering the market”

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