PhosChem Calls It Quits

October 2, 2013 10:15 AM

A spokesman for MosaicCo has reported that the phosphate export venture PhosChem has disbanded. The venture included MosaicCo. which provided over 90% of the product moved through PhosChem, and PotashCorp who's volumes sent through the export company have fallen in the last few years. Details are sketchy, but the move is said to be the result of Mosaic's new joint venture with Saudi Arabia's Ma'aden and Suadi Basic Industries Corp.POTMOS

Since 1974 Mosaic and PotashCorp provided 60% of U.S. Phosphate export volumes, accounting for nearly 10% of all phosphate sendouts globally. In response to a similar split of FSU potash kingpin Belarus Potash Company, stocks in potash producers fell dramatically creating a market panic, pressuring global potash prices lower.

But PhosChem serviced a much smaller proportion of the global market than did BPC. On top of that, MosaicCo and PotashCorp are already part of Canadian potash venture Canpotex. The two will not compete for marketshare and the move may just breathe some life back into PotashCorp's stock.

The split in the Former Soviet Union had a more dramatic impact because it looked early on like things could get ugly over there. An arrested CEO facing charges as Lukashenko's bagmen shake the bushes for Uralkali investors paints a chilly picture of the new cold war. Vladimir Putin responded with import/export restrictions in and out of Belarus. Two of Belaruskali's four potash mines are now closed and Uralkali has moved on to court other suitors. Stocks fell off sharply and the market is still asking when the bottom will come into focus.

The split of PhosChem is not the sort of tooth pulling we saw with BPC. The two former venture members are still engaged in Canpotex and the dissolution will help focus sendout volumes through Canpotex, moderating P pricing in the medium-term. Meanwhile, as MosaicCo buddies up with Saudi venues, less U.S. product will be shipped abroad, and demand from India and China can be met with a short trip from the Persian Gulf.

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