Rail delays stifle Canada potash output

Major Canadian potash producers Nutrien and Mosaic have been forced to trim production to mitigate the impact from persistently slow rail service by both Canadian Pacific (CP) and Canadian National (CN) railways.

The railcar delays during the first quarter of 2018 have caused on-site inventory levels to rise above seasonal norms. To alleviate mounting storage pressures, Nutrien today idled production at its 3.3mn st/yr capacity potash mine in Vanscoy, Saskatchewan. The company will also move its 4.4mn st/yr capacity Allan potash facility into a planned shutdown on 6 May.

The company said that start up of the facilities will be dependent on spring demand and rail car availability. No other production curtailments are currently planned for the Nutrien.

Mosaic has also tempered output rates across all of its potash facilities by intermittently stopping production to perform maintenance work. The company said that it remains to be seen if any scheduled turnarounds later in the year would be affected by the ongoing work.

"Our site warehouses are close to or at containment," Mosaic spokesperson Sarah Fedorchuk said. "We have limited storage at the sites, measured in weeks of operating time, not months."

Railcar service to the producers could worsen further as CP faces the possibility of a worker strike.

CP avoided a strike that was scheduled to begin on 21 April by forcing a full membership vote by both unions in question on the company's final offer. Both the Teamsters and International Brotherhood of Electrical Workers unions have strongly recommended that membership vote down the company's offer.

Any work stoppage by the rail company would be detrimental to potash shipments as CP is the main rail provider for Canpotex, the collective exporting arm of both Nutrien and Mosaic.

Despite the recent service issues, railcar deliveries of potash through the first two months of 2018 were up by 9pc year-over-year at 34,766 railcars, according to Statistics Canada. During their first quarter earnings reports, CP reported a 19pc increase in potash carloads from the previous year at 37,300 carsm, while CN cited a 12pc decline in combined grain and fertilizer carloads during the period as the company delivered 145,000 cars.