Uralkali to cut potash production in 2H19

Russian potash firm Uralkali will reduce potash output by 350,000-500,000t in the second half of 2019, driven by turnarounds and softening prices.

Weak demand, falling prices and scheduled maintenance on production assets have led to the temporary cut, the firm said. Uralkali produced 5.6mn t of KCl in the second half of last year.

Following its results for the first half of this year, the producer downgraded global potash demand to 66mn t, from 67mn-68mn t, citing weak demand in North and Central America, as well as southeast Asia, as a result of falling crude palm oil margins.

Uralkali follows other major suppliers

Uralkali said the reduction in output is in keeping with its strategy of adjusting supply to global demand and pricing. Other major potash producers have announced a series of reductions in output in recent weeks in the face of falling global prices.

North American producer Nutrien plans to shut three of its potash mines for eight weeks in the next quarter in response to slower global demand.

Meanwhile, Belaruskali will carry out various production maintenance from this month. Maintenance to a winding engine at the firm's production unit 3 in August and September will mean an unspecified reduction in pink MOP. It will also perform work on two lines at production unit 4, decreasing white MOP output during the same period. A major turnaround will begin at production unit 3 in September, followed by production unit 4 in October, and production unit 2 in late October or early November. The actual dates and length of maintenance have not been determined.

And US-based Mosaic will temporarily idle potash production at its mine in Colonsay, Saskatchewan as the company focuses on its low-cost Esterhazy K3 project.

Potash prices have continued to fall across the major buying regions this year, driven by weak demand, prompting the reduction in output from major suppliers. The Argus Standard MOP index, a basket of fob prices from the four largest export regions, has dropped by almost 14 basis points since the start of this year. The total announced production cuts of up to 2.4mn t should be enough to rebalance supply, although it will be several months before the effects of the reductions can be assessed.