TORONTO (miningweekly.com) – Demand for potash could come close to global supply capabilities next year, especially if China returns to the market as expected, Potash Corp CEO Bill Doyle said on Thursday.

The company, like other crop nutrient producers, has weathered a difficult couple of years, after farmers around the world responded to the financial crisis by deferring the use of fertiliser.

However, demand is now returning, with Potash Corp forecasting global potash consumption will reach 50-million tons this year.

Potash buyers in most regions were purchasing volumes at “near pre-recession levels” during the second quarter, Doyle said on a conference call.

“With the notable exception of China, where adverse weather impacted spring planting and fertiliser use, virtually every major potash market moved closer to historical consumption levels.”

Doyle also emphasised that the 50-million-ton estimate for 2010 has been calculated without normal purchasing activity from China, and does not include expected restocking in the global supply chain.

In 2011, however, China is expected to return to its pre-downturn consumption levels of about 11-million tons.

“The prospect of a hungry and growing market in China presents a very positive operating environment in the years ahead,” he commented.

Global consumption in 2011 is expected to rise to some 55-million tons, while Potash Corp estimates that producers around the world will have the operational capability to supply about 60-million tons.

“This would result in operating rates higher than 90% of capability, reflecting a historically tight market,” he said.

As a result, buyers may need to move away from the 'just in time' purchasing trends that have been evident in the last couple of years, and start refilling their inventories, Doyle added.

“We believe a strong foundation has been established, and that fertiliser buyers and food producers around the world are preparing to take on the significant challenge of meeting food demand in the months and years ahead.

During the period of weaker demand, Potash Corp reduced its production significantly to match consumption, but continued to invest in additional capacity.

This means that the company has an “unmatched ability” to bring on new capacity and sell new volumes as demand increases, Doyle said.

Shares in Potash Corp, which published second-quarter results earlier in the day, jumped 4,6% on Thursday, to C$106,39 apiece by 16:19 in Toronto.