| WINNIPEG, Manitoba
WINNIPEG, Manitoba Jan 11 Makers of fertilizers
that boost corn and palm growth are taking advantage of higher
profit margins for uses in other industries, such as oil
drilling and livestock feed, to ride out a severe slump.
Potash and phosphate prices touched multi-year lows last
year due to a capacity glut and soft crop prices. Higher and
more stable returns for some industrial applications are
prompting producers to shift greater attention to what has been
a sideline business for some.
Canada's Agrium Inc said on Tuesday that nearly
one-sixth of production at its new Borger, Texas urea nitrogen
plant will be diesel exhaust fluid (DEF), used to cut vehicle
emissions, boosting the company's slice of industrial markets.
DEF offers generally higher and less volatile margins than
agricultural urea markets, Agrium spokesman Richard Downey said.
Agrium's move follows Potash Corp of Saskatchewan's
November announcement that it would halt production of red
potash at its Cory, Saskatchewan mine to focus instead on white
potash, which has applications in the pharmaceutical industry.
"We've got steady customers for it, so we need to continue
to fill that market. There's no doubt there is demand for it,"
Potash Corp spokesman Randy Burton said.
K+S AG's new Legacy potash mine in Western
Canada, opening this year, will produce industrial products
along with common potash, spokesman Michael Wudonig said.
"In our view, industrial potash is a growing market,"
Wudonig said in an email.
K+S' revenue from industrial potash fell 6 percent in the
first nine months of 2016 from the year-ago period, compared
with a steeper plunge of 31 percent in common potash sales.
Sales of potash and phosphate for industrial or animal feed
make up a small percentage of some producers' revenue, but
margins are bigger than for fertilizer, said Andy Jung, director
of market and strategic analyst at Mosaic Co.
Potash applications for drilling muds are likely to see
robust growth as oil and gas prices improve, Jung said. Mosaic's
expansion in Brazil - bolstered by the recent announced
acquisition of Vale SA's fertilizer unit - also gives
it access to phosphate demand growth in animal feed, he said.
Sales of ICL Israel Chemicals Ltd's industrial
products, including flame retardants, rose 4 percent in the
third quarter from a year earlier, while potash sales declined.
While industrial margins are attractive, long-term demand
growth still looks strongest for fertilizer applications.
Industrial use of potash looks to rise 6 percent by 2020 and
represent 15.5 percent of overall demand, according to Kevin
Stone, minerals and metals adviser for the Canadian government.
Fertilizer demand for potash looks to grow by 8 percent during
(Reporting by Rod Nickel; Editing by Richard Chang)