Top fertiliser supplier Nutrien will indefinitely pause the ramp-up of its potash production capability to 18-million tonnes, in response to market conditions, said president and CEO Ken Seitz.
Announcing the TSX- and NYSE-listed company’s second-quarter results on Thursday, he said the global crop input market had experienced “unprecedented volatility” over the last year and a half.
“We continue to see demand strengthen in our key markets, in particular North America; however the process of recovery has been more uneven in offshore markets,” said Seitz.
Global potash prices weakened through the second quarter, driven by continued destocking in offshore markets and uncertainty created by the delay in the Chinese potash contract.
Nutrien expects potash exports from Russia to be down three- to four-million tonnes and from Belarus, down four- to five-million tonnes, compared with 2021 levels.
The company also expects Canadian potash exports to be constrained by logistical challenges, owing to the strike at the Port of Vancouver. As a result, Nutrien has lowered its projected global shipment range for 2023 to between 63-million and 65-million tonnes.
To reduce controllable costs, Nutrien not only paused its potash ramp-up, but also suspended work on its proposed 1.2-million-tonne Geismar clean ammonia project.
This decision is owing to an increase in expected capital cost, compared with initial estimates, continued uncertainty on the timing of emerging issues for clean ammonia and the prioritisation of other capital allocation alternatives.
Nutrien will reduce its capital expenditures by about $200-million this year to $2.8-billion, and is targeting a $100-million reduction in expenses compared with previous estimates.
It also revised its full-year adjusted earnings before interest, taxes, depreciation and amortisaiton guidance to between $5.5-billion and $6.7-billion and its adjusted net earnings guidance to between $3.85 and $5.6 a share.
Nutrien generated net earnings of $1-billion and adjusted Ebitda of $3.9-billion ($3.63 adjusted net earnings a share) in the first half of 2023, down significantly from the record levels achieved in the first half of 2022.