Uralkali Expects China to Cut Back on Potash Imports After Devaluation of Currency

Bloomberg reported that Uralkali expects Chinese potash imports to slow down after the Asian nation devalued its currency. The Russian producer also said that China’s introduction of a fertilizer tax will probably hurt imports this year.
As quoted in the market news:

The yuan depreciation and China’s introduction of a fertilizer tax will probably hurt imports this year, the company said in a first-half earnings statement on Tuesday. Demand from other key markets in India and Brazil is also declining, according to the potash producer.
China’s decision to devalue its currency to aid exports also makes importing commodities more expensive. The potash market is oversupplied and prices in Brazil, one of the largest spot markets, dropped about 15 percent this year. Fitch Ratings Ltd. last month said it expects potash to remain low over the next five years as new production from low-cost factories exceeds demand.
While China’s tax won’t create a “big strategic drama” for the market, along with a weaker yuan it won’t help global producers get the best price for the next contract in China, Oleg Petrov, chief of sales, said on a conference call on Tuesday. China is buying potash at $315 a metric ton this year from global suppliers under a contract.
Lower crop prices don’t encourage farmers to increase potash application rates, Uralkali said. “In the absence of adverse weather over the coming months, ample supplies for major crops will keep downward pressure on prices,” it said.
In India, a weaker rupee versus the dollar will help limit the nation’s potash imports this year, Uralkali said. Inbound shipments into India will probably total 4.3 million to 4.5 million tons compared with 4.5 million tons last year, the company estimated.

Click here to read the full Bloomberg report.