Reuters quotes the chief executive of Russian potash producer Uralkali telling an investment conference in Moscow on Tuesday that spot potash prices could reach $600 per tonne by the end of the year.
Uralkali also said it was considering entering into a transaction with Belaruskali, contradicting a Belarus deputy prime minister who earlier said the $20bn state-owned company was not for sale. A Belaruskali-Uralkali merger would create a group with annual production of 21m tonnes, dwarfing current number one Canada’s Potash Corp.
CEO Vladislav Baumgertner said that demand for potash is strong and major miners are operating at full capacity.
Back in January 2010, German potash producer K+S was charging 285 euros – roughly $407 – per ton of potash. As of now, bulk clients are buying potash at 363 euros or $520 per ton, a 27% net increase over the last 18 months.
Responsible for one-third of the worlds potash fertiliser production, Belaruskali could have been worth as much as $20bn.
Bloomberg reported last year prior to the Russian merger that the market control of the world’s eight largest potash miners already exceeds that of oil cartel OPEC:
With the global population adding 75 million people a year, food demand is set to put further strain on crops, increasing the need for fertilizer. Consolidation among producers of potash has caused concern in countries such as India, the biggest importer last year, that prices will rise.