[potash fertilizer] August 18, Potash Corp., a Canadian potash giant, said that the company received a bid of $130 per share from BHP Billiton and unanimously rejected the proposal. Potash shares jumped 28% on Tuesday.
Zhongjin Comment: As of Tuesday, Potashi's market capitalization was approximately US$42.6 billion, which was significantly higher than the US$38.2 billion of BHP offer. Whether future acquisitions can be achieved remains to be tracked. If the price of BHP is further increased in the future, it may trigger a re-evaluation of potash fertilizer resources and increase the valuation of potash fertilizers. (See table 3 for the valuation of international potash fertilizer companies.) Recently, the share prices of the potash giants have risen significantly (see Attached Table 1). The current soaring stock price of Potash and the possibility of revaluation of future potash resources, combined with the current domestic and international potash fertilizer market recovery, is likely to become a catalyst for A shares potash fertilizer (Salt Lake Potash, Salt Lake Group, Guannong shares).
[Potassium Fertilizer] On August 7, according to the British “Financial Times†report, Russia will merge Uralkali and Silvinit, the two largest potash producers in the country, to create the second largest potash producer in the world after Potash Corp.
China Gold Review: This move will further increase the monopoly concentration of international potash fertilizer suppliers and will, to a certain extent, weaken the bargaining power of potash fertilizer importing countries. In the context of a bull market for agricultural products, the potash price increase elasticity may exceed historical levels.
Investment Highlights: From the perspective of international fundamentals, the recent surge in the prices of international agricultural products has led to an expected increase in potash demand, and Potash has recently increased the domestic price of potash fertilizer. According to the data released by Potash on August 13 (Annex 2), potash stocks in North America fell further and approached the average inventory level for five years.
From the perspective of domestic fundamentals, potassium fertilizer is better than phosphate fertilizer, and phosphate fertilizer is better than nitrogen fertilizer. At present, with the approach of the agricultural season, domestic utilization rates of compound fertilizers continue to rise, and potash stocks are insufficient. Affected by Russia's maintenance in August and limited transportation, border trade transactions remained flat; port potash stocks remained low. Overall, the supply and demand of potash continued to improve.
If the prices of agricultural products fall back, the speculation in the agrochemical sector will come to an end. If the agrochemical sector declines, it should be bought on the bargain-hunting basis and the prosperity is improving, such as Salt Lake Potash.
If the prices of agricultural products continue to soar in the future, the global oligopolistic pattern of potash fertilizers will make the price of potash fertilizers more flexible, and potash fertilizers will also become an excellent investment target for fertilizers and pesticides.