Sociedad Quimica y Minera de Chile, (SQM), a Chile based chemical manufacturer, faces a positive outlook for earnings as Canpotex, the world's largest potassium producer, raises its potassium prices by 30 percent. Canpotex, a North American industry group consisting of PCS, Mosaic and Agrium, with a global market share of 34% of potassium exports, released the announcement last Thursday. The new prices announced apply to Japanese clients, setting the price at US$900/ton for deliveries in the first quarter 2009.
The price adjustment indicates a supply shortage for the coming year, according to an analysis published by Banchile Inversiones. The Chilean investment bank also predicts that potassium demand will grow by 3 million tonnes in 2009, reflecting increased consumption in China.
This scenario paints a positive outlook for the Chilean chemicals manufacturer SQM, which in 3Q '08 obtained 66.7% of revenues from potassium based products, totaling US$393 million for the quarter.
SQM, which has a market cap of US$6.1 billion, has NYSE listed ADRs. The company currently trades at a P/E of 14.14, and has a year-to-date performance of (+32.9%), adjusted for a 10:1 split in March. The ADR closed November 11 at US$23.05, up from the split-adjusted US$17.8 opening on January 2.