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Fertilizer Makers Refocus on Industrial Applications in Search of Higher Margins

Fertilizer manufacturers are taking advantage of higher profit margins for uses in other sectors than agriculture, for example in oil drilling and livestock feed. Potash and phosphate prices have been going through multi-year lows due to global oversupply and soft crop prices. More stables and generally higher returns for applications in some industries make fertilizer producers focus more attention to the part of the business that has so far been generally neglected.

Canada’s potash company, Agrium Inc said earlier this week that almost one-sixth of the production at its new Borger, Texas, urea nitrogen plant would be diesel exhaust fluid (DEF). DEF is used to decrease vehicle emissions, thus strengthening Agrium’s market share in industrial markets. The company’s spokesperson, Richard Downey, explained that DEF simply offered higher and less volatile margins. This decision is a follow-up on the last November move to halt production of red potash at Agrium’s Cory mine in Saskatchewan to focus on white potash, which is widely used in the pharmaceutical industry.

“We’ve got steady customers for it, so we need to continue to fill that market. There’s no doubt there is demand for it,” Potash Corp spokesman Randy Burton said and K+S AG’s spokesperson Michael Wudonig added that “in our view, industrial potash is a growing market”. K+S AG is going to open its new Legacy potash mine in Western Canada this year. The German company’s revenue from industrial potash, however, went down by 6 percent in the first three quarters of 2016 compared with a fall of 31 percent in common potash sales for the same period. Andy Jung, director of market and strategic analyst at Mosaic Co., summed up the most recent developments saying that sales of potash and phosphate for industrial or animal feed account for a small percentage of some companies’ revenue, but margins are bigger than for fertilizer.

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