Mosaic exceeds Q2 phosphate sales volume forecast
Mosaic sold 2.8mn tonnes (t) of finished phosphate products in the second quarter, surpassing its earlier guidance of 2.3mn-2.7mn t despite lower Brazilian demand.
The US producer focused more on the North American and Indian markets during the period to combat the slow down in Brazil, which has been driven by a weaker real and limited credit availability to farmers.
"As we looked at the Brazil market, instead of pushing product there, we brought it back and put it into place here at home in North America," senior vice president of commercial Rick McClellan said.
Mosaic sold 895,000t of DAP/MAP in North America during the period, a 6pc drop from the same time a year ago, while international sales grew by 18pc year-over-year to 1.2mn t. Sales of MicroEssentials, which are primarily used in North America, grew by 7pc from a year ago to 516,000t, the most since the fourth quarter of 2013.
Mosaic's average DAP selling price for the quarter was $450/t fob plant ($408/st), down by $15/t from a year ago. It produced 2.5mn t of finished phosphate, a slight year-over-year rise, while operating at 86pc of capacity.
The company expects to sell 2.1mn-2.4mn t of phosphates in the third quarter at an average price of $435-455/t fob plant. It expects roughly flat phosphate operating rates for the quarter.
Mosaic said Brazilian demand will pick up in the second half of the year because of improved credit availability and stable soybean prices, but did acknowledge potential logistics and timing issues ahead of the upcoming planting season there. However, the Mosaic-owned port at Paranagua should help the producer avoid some of those concerns.
In the US, Mosaic expects lower competition from imported DAP and MAP than a year ago.
"We are very well-positioned to defend our market," McClellan said.
The higher phosphate sales volumes drove Mosaic's quarterly profits to $391mn, a 57pc increase from a year ago.
In Mosaic's potash segment, lower operating costs and higher year-over-year prices offset lower sales volumes.
The producer sold 2.3mn t of potash in the second quarter, a 6pc fall from a year ago. North American sales volumes fell by 27pc to 641,000t, while strong export contractual commitments pushed international sales up by 8pc to 1.5mn t.
Average MOP sales prices for the quarter were $280/t, up from $267/t a year ago but down by $8/t from the first quarter. North American MOP prices were $345/t, up from $308/t a year ago but down by $17/t from the prior quarter. Mosaic's averaged potash production cost fell by $31/t from a year ago to $103/t, in part because of a weaker Canadian dollar versus the US dollar.
Mosaic produced 2.36mn t of potash in the quarter while operating at 90pc of capacity, compared to producing 2mn t during second quarter 2014. Total first-half potash production reached 4.8mn t, up by 23pc year-over-year and leading to some inventory build-up, which Mosaic plans to draw down during the third quarter as it lowers operating rate to about 65pc while taking maintenance turnarounds at its Saskatchewan mines. The company expects to sell 1.6mn-2mn t of potash in the third quarter, compared to actual sales of 1.8mn t a year ago. Full-year sales volumes are projected at 8.2mn-8.6mn t, down from 8.97mn t sold in 2014, with the lower forecast attributed to uncertainty over a repeat of the strong December fill period that was seen in the US in 2014.
"We don't know if people will step in and buy in the second half after they get done with the fall season," McClellan said.
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