The merger between UralKali and Silvinit, the two largest potash companies in Russia, has been approved by the boards of both parties on Monday. This move will not only reshape the pattern of the Russian fertilizer industry, it will also synthesize huge forces in the potash export market, further weakening China’s influence in global pricing.
For decades, the world's largest potash fertilizer company has been exporting potash through two major marketing agencies (actually a legitimate "cartel"), and they secretly negotiate contracts with importing countries each year. China is the world's largest importer of potash fertilizers, followed by India and Brazil.
In order to maintain higher prices, these potassium fertilizer cartels will control production at a level that matches the demand – which is roughly the same as that of the oil cartel Opec (OPEC) in the oil market.
One such company is Canpotex, which represents Canada-based Potash Corp and Agrium in Canada, and Mosaic, which is based in the United States, and exports potash outside of North America. Another Belarusian Potash Company (BPC) is a marketing agency based in UralKali in Moscow and Belaruskali in Belarus. Some little-known industry rules protect the two organizations from being plagued by antitrust supervision.
Analysts and consultants said that the merger of the two largest potash fertilizer companies in Russia opened the door for Silvinit to join BPC, which will further enhance the “firepower†of this Russian-Belarusian cartel compared to China, India and Brazil’s strong purchasing power.
Silvinit CEO Vladislav Baumgertner told the Financial Times that after a year or so of negotiations and a "transition period", his company "may join in" the BPC. But he added: "No decision has been made right now."
But consultants say that this alliance is only a matter of time. Until 1993, all three companies were operating under the same export agency. After the disintegration of the former Soviet Union, they declared their split. UralKali, Silvinit and Belaruskali will collectively control about 35% of the global potash export market. Oliver Hatfield of Integer Research, a consultancy, said: "This is a large-scale integration."
Canpotex already controls about 25% of the world's potash exports, which will enable the two main cartels to control the market share of 60%.
Barrie Bain of the consulting firm Fertecon said: "This is a typical oligarchic organization composed of a few major suppliers."
Some self-produced independent potash producers have a lower market share. K+S, which is headquartered in Germany, and ICL in Israel, each have approximately 10% of the market share.
Potash has been regarded as an unattractive commodity for many years, but it entered the investor's horizon during the 2007-2008 global food crisis. Since then, the industry has rapidly integrated, and the two major export marketing agencies have dominated. In mid-2008, the price of potash rose from $150 per ton in 2006 to nearly $1,000 per ton. The potash fertilizer importing countries headed by China regard the growth of their agriculture as a priority for ensuring domestic food safety. After the world's largest miner, BHP Billiton, launched a hostile $40 billion bid for Canadian potash, Chinese companies have considered issuing competitive bids for the company.
As the farmers reduced the use of chemical fertilizers during the global financial crisis, the price of potash fell once from a high in 2008. However, prices have begun to rise again, and the latest quarterly contract with major consumer countries is currently around $400 per ton. Industry executives believe that in the context of high agricultural product prices, potash fertilizer prices will continue to rise next year. The high prices of agricultural products will encourage farmers to increase the amount of fertilizer used per unit area, while expanding the planting area.
Pavel Grachev, UralKali's chief executive, said that next year's demand and price outlook "looks very good." He agrees with the views held widely by other potash fertilizer executives and added: "I think the price will definitely rise next year. There is no possibility of falling prices, and even it is impossible to be even."
For decades, the world's largest potash fertilizer company has been exporting potash through two major marketing agencies (actually a legitimate "cartel"), and they secretly negotiate contracts with importing countries each year. China is the world's largest importer of potash fertilizers, followed by India and Brazil.
In order to maintain higher prices, these potassium fertilizer cartels will control production at a level that matches the demand – which is roughly the same as that of the oil cartel Opec (OPEC) in the oil market.
One such company is Canpotex, which represents Canada-based Potash Corp and Agrium in Canada, and Mosaic, which is based in the United States, and exports potash outside of North America. Another Belarusian Potash Company (BPC) is a marketing agency based in UralKali in Moscow and Belaruskali in Belarus. Some little-known industry rules protect the two organizations from being plagued by antitrust supervision.
Analysts and consultants said that the merger of the two largest potash fertilizer companies in Russia opened the door for Silvinit to join BPC, which will further enhance the “firepower†of this Russian-Belarusian cartel compared to China, India and Brazil’s strong purchasing power.
Silvinit CEO Vladislav Baumgertner told the Financial Times that after a year or so of negotiations and a "transition period", his company "may join in" the BPC. But he added: "No decision has been made right now."
But consultants say that this alliance is only a matter of time. Until 1993, all three companies were operating under the same export agency. After the disintegration of the former Soviet Union, they declared their split. UralKali, Silvinit and Belaruskali will collectively control about 35% of the global potash export market. Oliver Hatfield of Integer Research, a consultancy, said: "This is a large-scale integration."
Canpotex already controls about 25% of the world's potash exports, which will enable the two main cartels to control the market share of 60%.
Barrie Bain of the consulting firm Fertecon said: "This is a typical oligarchic organization composed of a few major suppliers."
Some self-produced independent potash producers have a lower market share. K+S, which is headquartered in Germany, and ICL in Israel, each have approximately 10% of the market share.
Potash has been regarded as an unattractive commodity for many years, but it entered the investor's horizon during the 2007-2008 global food crisis. Since then, the industry has rapidly integrated, and the two major export marketing agencies have dominated. In mid-2008, the price of potash rose from $150 per ton in 2006 to nearly $1,000 per ton. The potash fertilizer importing countries headed by China regard the growth of their agriculture as a priority for ensuring domestic food safety. After the world's largest miner, BHP Billiton, launched a hostile $40 billion bid for Canadian potash, Chinese companies have considered issuing competitive bids for the company.
As the farmers reduced the use of chemical fertilizers during the global financial crisis, the price of potash fell once from a high in 2008. However, prices have begun to rise again, and the latest quarterly contract with major consumer countries is currently around $400 per ton. Industry executives believe that in the context of high agricultural product prices, potash fertilizer prices will continue to rise next year. The high prices of agricultural products will encourage farmers to increase the amount of fertilizer used per unit area, while expanding the planting area.
Pavel Grachev, UralKali's chief executive, said that next year's demand and price outlook "looks very good." He agrees with the views held widely by other potash fertilizer executives and added: "I think the price will definitely rise next year. There is no possibility of falling prices, and even it is impossible to be even."
Elevator Overload Measurement System
Balance Load Cell,Weighing Load Cell,Elevator Sensor
Hitech Elevator Co., Ltd. , http://www.elevator-control-traction.com