US potash and phosphate producer Mosaic produced a record 2.6mn tonnes (t) of potash in the fourth quarter while carrying out a successful proving run at its expanded Colonsay, Saskatchewan, mine.
Mosaic's potash operating rate for the quarter was 91pc of operational capacity, up from 65pc during the same time in 2014, while Colonsay's capacity increased to 2.5mn t/yr from 1.8mn t/yr. The elevated production helped rebuild depleted inventory levels.
The company sold 2.3mn t of potash in the quarter, a 21pc year-over-year increase. Average MOP selling prices were $295/t fob plant, down from $303/t during the fourth quarter of 2013 but at the top of Mosaic's guidance for the period. Potash segment sales totaled $763mn, up by 17pc from a year ago, with higher sales volumes offsetting lower prices.
Mosaic expects to sell 2mn-2.3mn t of potash at an average price of $270-295/t fob plant in the first quarter while producing at 85-90pc of capacity (2.4mn-2.6mn t). The company said it is sold out for the first quarter as it ships product ahead of the North American spring season.
"We've seen a fair amount of inventory moved into the supply channel," Mosaic said. "US retailers are much better positioned. The system is pretty well loaded for the spring season."
Mosaic expects to sell 8.5mn-9mn t of potash in 2015. Mosaic does not foresee any oversupply issues in North America despite the recent introduction of Belarusian imports to the US market as well as Agrium's expanded Vanscoy, Saskatchewan, mine coming back online.
While ratcheting up its potash output, Mosaic deliberately scaled back phosphate production to avoid building up high-cost inventory because of elevated ammonia and sulfur feedstock costs.
The company produced 2.4mn t of finished phosphates in the quarter (81pc of operational capacity), up from 2mn t during the prior-year period, while selling 3.3mn t, down slightly from 2013 but exceeding expectations of 2.5mn-2.8mn t.
Phosphate sales grew 4pc year-over-year to $1.6bn driven by an 18pc rise in average selling prices to $448/t fob plant.
Overall profits for the quarter of $361mn nearly tripled the prior-year total.
"Our discipline paid off," chief financial officer Richard Mack said.
Mosaic projects stable-to-firm phosphate prices for the first quarter, pegging average selling prices at $440-465/t fob plant. It expects to sell 2.8mn-3.1mn t during the quarter while operating at 80-85pc of capacity.
Full-year phosphate sales volumes are projected at 14.5mn-15mn t as the company is optimistic key importer India will have strong demand and potentially alter its government subsidy program with low oil prices possibly freeing up funds for fertilizer.
"We believe the pipeline is at extremely low levels and we need to replenish that," Mosaic said. "India simply has a tremendous nutrient imbalance."
Mosaic also expects to fully utilize its acquired ADM distribution assets in Brazil this year, adding to its overall sales volumes. The transaction was completed in the fourth quarter.
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