The end of BPC and the future of potassium market

| Foreign Markets |

At the beginning of this week it was announced that BPC, a trading company bringing together Belarussian and Russian manufacturers of potassium, is planning to close after 8 years of operation. The closure of this joint venture company comes as a huge surprise to market analysts and observers. The obvious question is what changes the decision will bring for the global potassium manufacturing business.

Market dominance

BPC (Belarus Potash Company) has been active for 8 years and was responsible for 43% of potassium manufacturing in the world. It was the Russian producer of potassium fertilizers Uralkali that took the decision to cease exports via BPC, the potassium products dealer.

BPC was established 8 years ago with the following share structure: Uralkali – 50%, Belaruskali, a Belorussian potassium company – 45%, and Belorussian railroad company – 5% shares. The press announcement says that from now on the sole channel of distribution of Uralkali products will be via a company called Uralkali-Trading.

The results of changes on the potassium market

The comments of Belorussian and Russian experts vary. The most frequent conclusion is that the closure of BPC will bring the most losses for the Belorussian potassium company. However, Belorussian analysts predict that Uralkali’s decision will also have negative impact on the Russian company’s financial situation. In their opinion, the cooperation model in place to date has made it possible to decrease costs and improve profits.

Vladislav Baumgertner from Uralkali believes that the decision will result in a fall of potassium prices below 300 dollars per ton. Analysts and market experts, including those cooperating with “PUŁAWY”, doubt whether the recent events will actually bring prices down. It is too early to give opinion about the repercussions of BPC’s demise. Should there start a confrontation between Belorussian and Russian producers, the break-up of the market dominance ought to benefit the end users, namely the farmers.