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"K+S announced today it will lower its potash price in Europe to ae435 per tonne from ae555. This compares with prices of $735-750 in Brazil and $625 in India. While current spot prices have been expected to drop subsequent to a settlement in India or China, we are concerned that K+S stepping in ahead of BPC and Canpotex may indicate a weakening of the industry discipline at this crucial time," UBS analyst Roni Biron writes.
A year ago, Israel Chemicals' share price was at an all-time high of NIS 74. At the time, corn prices were at $7 per bushel and potash prices hovered around $1,000 per tonne. Corn prices are now around $4 per bushel, and potash prices have subsided.
Biron has reduced his price estimate for potash for the second half of 2009 and for 2010 to $570 per tonne from $650 per tonne, reflecting prices of $500 in China, $550 in India and $600 spot.
Biron notes that "ICL ships over 1.5 million tonnes to Europe in a typical year (c.30 percent of volume)."
Yesterday, Israel Chemicals' share price fell almost 8 percent in the wake of K+S's profit warning.
To see more of the Globes or to subscribe to the newspaper, go to http://www.globes-online.com. Copyright (c) 2009, Globes, Tel Aviv, Israel Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
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