With the world's biggest fertilizer firm reporting earnings, I figured it's a good time to check in on the sector.
No, Potash Corp of Saskatchewan
Yara International is the Nokia
As with fertility goddess PCS, Yara sources low-cost gas in Trinidad, and the company has also secured supply in the Middle East. This is important, because European natural gas prices have gone through the roof. I'm less familiar with other nitrogen producers' natural gas supply chains, but Fools ought to be laser-focused on this absolutely critical component.
The commodity nature of nitrogen may help explain Mosaic's
Speaking of potash expansions, PCS just announced it's increasing capacity by 2.7 million metric tons. The gains are all coming from either de-bottlenecking or expanding current projects, and at a cost 60% below building a brand new mine. Production will come online faster, too. Such are the perks of excess capacity.
There are a few other global developments worth mentioning. On May 1, China raised its export duties on urea from 35% to 135%. This mirrors the country's recent curbs on the production of aluminum -- another energy-intensive product. That tariff lifted urea prices 50%, and they're moving even higher of late, at least partially on news of various delays to Middle Eastern projects.
Rounding out the week's events was Canpotex's (the Canadian potash alliance) roughly 20% price hike from current levels, to $1,000 per metric ton. The same day, Belarusian Potash, Canpotex's Eastern European analogue, kicked its latest Sri Lankan contract up to $1,050. You thought iron ore ogres Vale