OAO Uralkali said that they are planning to end the set production restrictions the underpinned the current global prices for the crop nutrient potash. The company said that they are set to suspend joint venture with a Belarusian miner that controlled export trading of the US$20 billion market of the crop nutrient.
Due to the flood of supply that overwhelmed the current market demand, shares from producers including OAO Uralkali, Mosaic Co., Potash Corp. of Saskatchewan Inc. and Israel Chemicals Ltd tumbled as much as 24%.
"This effectively brings about a transformation of the entire potash industry, shifting it away from what has been a de facto duopoly," Matthew Korn, an analyst at Barclays Plc, said. "This is one of the few occasions of a market truly undergoing a sudden game-changing event, with impacts that cannot be overstated."
The venture that Uralkali is ditching is one of the two ventures that until recently controlled most the of world's supply for the crop nutrient potash. The venture negotiated fixed term supply contracts for companies that supplied potash. With the end of the deal, potash companies will now be able to compete in export markets, helping them to match production with the current market demand.
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