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Scientist Running Uralkali Seeks to Avoid Potash Price Drop

June 10, 2014

OAO Uralkali Chief Executive Officer Dmitry Osipov favors stable potash prices as he considers how to manage output at the world’s biggest producer of the fertilizer.

That’s a relief for investors and peers after the company’s decision, under his predecessor, to end a venture with Belarus and ramp up production led to a price slump of about 30 percent.

"We are a responsible market player," Osipov, 48, said in an interview in his Moscow office. "Market share is important for us, but we don’t want prices to fall. It’s too early to say what utilization rate we will have in the second half."

Osipov, an academic researcher before rampant inflation in 1993 forced him to seek better paid work in industry, replaced Vladislav Baumgertner, 42, after the breakup of the marketing venture landed the then-CEO in a KGB jail in Belarus. While Uralkali has since stuck to a policy of higher output, running at near full capacity from about 70 percent previously, Osipov is keeping his options open for the second half of the year.

"That’s a shift from what Uralkali was saying before," Elena Sakhnova, a VTB Capital analyst, said by phone.

Output will probably be 11 million metric tons this year, below the company’s target of 12.5 million tons, Sakhnova said.

"This is a more responsive approach from Uralkali, which is good for the market," Konstantin Yuminov, an analyst at ZAO Raiffeisenbank, said in a telephone interview yesterday.


Price Slump


Osipov became CEO in December after billionaire Suleiman Kerimov and his partners sold their stakes in the company to OAO Uralchem and billionaire Mikhail Prokhorov’s Onexim Group. That deal offers a chance to revive the tie-up with state-controlled Belaruskali after the demise of its venture with Uralkali last year roiled the $20 billion global potash market.

Potash prices in major markets like Brazil slumped to as low as $310 a ton, from about $440, by December following the venture’s collapse, since recovering to about $350 a ton.

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