13.08.2013 - Other voices: Potash market crash: value trap or an investment opportunity?
At the end of July international markets were rocked by news of Russian company Uralkali quitting potash sector cartel. Shares of almost all companies in the potash sector plummeted by about 20% in one day and included Potash Corp, Mosaic, Agrium, Israel Chemicals, as well as Uralkali itself. Similar market events happen on a pretty regular basis and media provides a lively coverage and stories of such developments. The break-up of the Belarusian Potash Company (BPC), a joint venture of Uralkali and Belaruskali is believed to have a significant influence on market prices with analysts predicting declines by as much as 25%. Such decline in prices will most certainly have a significant influence on profitability of all companies in the sector while manufacturers with relatively high costs to be hit especially hard. (Written by Alex Gavrish, founder and CEO of Etalon Investment Research, and author of “Wall Street Back To Basics.”)