The share price of Israel Chemicals fell 17 percent after Russian potash producer Uralkali JSE broke away from the Potash producers’ cartel and began negotiating its own deals, Globes reported on Monday. Uralkali says potash prices will fall below $300 per ton. The most recent potash contracts were for $405 per ton.
Israel Chemicals faces new pressure from the Uralkali decision to quit the Belarusian Potash Company (BPC) potash cartel, and which is now in contact with India and Brazil on new potash contracts. Israel Chemicals will publish its financials for the second quarter on August 7.
The company posted a profit of $305 million on $1.64 billion revenue for the first quarter. It closed its last potash contracts at $413 per ton. Potash and phosphates accounted for 58 percent of the company’s sales in the first quarter.
That development came as the Ministry of Finance continued its opposition to the merger of Israel Chemicals with Potash Corporation of Saskatchewan. Ministry officials were undeterred by the market turmoil, telling Globes that there was “nothing new under the sun.”
“The potash market is very volatile, and it is known that when prices fall, Israel Chemicals’ productivity and profits fall,” said a top ministry official.
One official rejected the argument that market volatility would seriously damage Israel Chemicals. “Factually, the opposite is true, because Israel Chemicals’ performance will actually improve in the competitive environment,” he asserted.