SQM cuts capex as potash price war looms

|By:, SA News Editor

Chilean fertilizer producer SQM (SQM -1.3%) says it will cut its planned spending for this year to ~$400M, below $500M estimated previously, and invest even less in 2014, in the wake of the increasingly nasty potash dispute between Russia and Belarus.

The bleak outlook comes on top of a difficult Q2 for SQM, which reported overall sales slipping and sharply lower net profit, down 44% Y/Y.

Analysts at Chile-based LarrainVial estimates that existing pressure on SQM's margins and the Russian situation could result in realized 2014 prices for potassium chloride of ~$300/metric ton vs. its previous forecast of $471.