Former director at K+S AG
- Potential UOP (unit of production) from K+S's (ETR: SDF) Morton Salt sale, with a focus on potential CAPEX projects
- Potash supply, demand and pricing update, including impacts of curtailment on pricing
- Potential plant closures due to high cash cost per tonne
- Indian and Chinese price setting and global pricing dynamics
K+S has allocated EUR 2bn of the USD 3.2bn from the sale of Morton Salt for debt repayments, leaving around EUR 700m. The company has also outlined some of the things it would like to do. What is your opinion on the main things that K+S will use the remainder of these proceeds for?
How do the projects you outlined line up with the statements that the company made about making the German business positive free cash flow even with low potash prices and a weak winter due to fair weather?
How much do you think that strategy could improve the economics of the German business?
What do you think the opportunities are for international expansion or new greenfield sites? Do you think that the cash that K+S has raised from Morton’s sale could open up any of those opportunities?
How much CAPEX do you think K+S’s projects will require over the next few years? Given that K+S have got around EUR 700m for capital projects left.
Can you outline the demand tonnage for potash globally in 2020 vs 2019 and how it’s playing out compared to your expectations?
Some experts claim that the market might be oversupplied and there’s new volume coming online that will be lower cost. Several new projects have been slowed down. When you think about the growth gap that the pandemic has created, do you think that the volume or the capacity expansions that have been delayed are large enough to solve this potential oncoming supply-and-demand imbalance?
How might supply curtailments have developed leading up to and during the pandemic? What is your opinion on the supply curtailment strategy and how well do you think the players are collaborating to bring down the total supply volume in the market? Is this just the closure or the curtailment of non-profitable mines?
Can you outline how pricing is set globally, particularly focusing on India and China? What other regions are prices typically set for?
How do crop prices relate to demand? What is the cross-elasticity of potash demand? Some industry commentators are expecting considerable crop price volatility in the coming years – do you agree with that?
During the 2008 crisis there was a drop in potash demand, which was largely caused by a drop in crop prices. What happens when crop prices fall and why did this lead to lower potash demand? Were farmers finding it unprofitable to plant? Were farmers trying to plant without potash, or were they struggling to access financing for purchases? What are the actual incentives here for such a significant drop in demand for potash?
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