Engineering & Mining Journal

JUN 2019

Engineering and Mining Journal - Whether the market is copper, gold, nickel, iron ore, lead/zinc, PGM, diamonds or other commodities, E&MJ takes the lead in projecting trends, following development and reporting on the most efficient operating pr

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112 E&MJ • JUNE 2019 MARKETS The potash or Muriate of Phosphate (MOP) market has experienced a signifi - cant recovery since 2016. Potash prices are now approximately 58% higher than its lows in late 2016 and world demand has increased markedly. According to the Food and Agriculture Organization of the United Nations, world demand in 2019 for potash, in all its forms, is forecast to reach 68 million metric tons (mt). Potash demand has grown at 4% annually for the last 5 years, which is well above the long-term average of 2.8%. This growth is due to record demand from Brazil, North America, China, India and Southeast Asia. The world's largest potash producer, Nutrien, agrees that market fundamentals remain strong, so much so the company maintained its 2019 forecast for crop nu- trients despite being impacted by the sec- ond wettest six-month period in the U.S. in 125 years. "We expect strong nitrogen demand to emerge in the second quarter of 2019 from the U.S., Europe and Latin America," said Nutrien President and CEO Chuck Magro. "In the U.S., we expect overall nitrogen demand will be at histori- cally strong levels in the second and third quarter with some weather-related product mix shift toward urea and UAN as opposed to ammonia. In recent weeks, this has led to NOLA urea prices increasing by almost $50/mt from February lows." Slow global demand and lower input costs pressured phosphate prices over the past quarter. Magro said he expects some support from an improvement in demand in Latin America, India and the U.S. in the second quarter. Unfavorable weather in the U.S. since the fourth quarter of 2018 has narrowed the application window. The U.S. Depart- ment of Agriculture (USDA) projects corn plantings will reach nearly 93 million acres, which would be the highest since 2016 and favorable for nutrient demand, seed expen- ditures and custom application services. Nutrien sold 2.92 million mt of potash during the fi rst quarter (a 7% decrease over Q1 2018) at an average price of $238/mt. "While some regions are still receiving ex- cess moisture, planting is under way and we expect strong crop input demand in the sec- ond quarter. As such, we are maintaining our annual guidance for 2019," Magro said. Five major producers account for roughly 75% of potash production world- wide. New potash capacity appears to be slowing. Much of the publicly announced additions, such as Nutrien's expansion at Rocanville, the K+S Bethune mine and other properties in Saskatchewan, and Eurochem's two projects in Russia will be absorbed if the market maintains course. Mosaic's K3 expansion, scheduled to be completed by 2024, will result in a small net increase as the K1 and K2 facilities are decommissioned. The future of BHP's Jan- sen project in Saskatchewan remains un- clear. The potash market will likely remain tight as global production could slow by another 4 million mt/y by the end of 2020 if more capacity is not brought online. Potash Demand Grows Steadily Gold and silver prices provided by KITCO Bullion dealers ( Platinum group metals prices provided by Johnson Matthey ( Non-ferrous base and minor metal prices provided by London Metal Exchange ( Iron ore prices provided by Platts Iron Ore Index. Currency exchange rates were provided by (June 3, 2019) Precious Metals ($/oz) Base Metals ($/mt) Minor Metals ($/mt) Exchange Rates (U.S.$ Equivalent) Gold $1,324.80 Aluminum $1,763.50 Molybdenum $26,840 Euro (€) 1.120 Silver $14.77 Copper $5,796.00 Cobalt $32,500 U.K. (£) 1.262 Platinum $803.00 Lead $1,791.00 Canada ($) 0.742 Palladium $1,341.00 Nickel $11,860.00 Iron Ore ($/dmt) Australia ($) 0.696 Rhodium $2,840.00 Tin $19,000.00 Fe CFR China $96.28 South Africa (Rand) 0.145 Ruthenium $258.00 Zinc $2,615.50 China (¥) 0.069

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