Forbes's Russian edition says billionaires Mikhail Gutseriev and Vladimir Evtushenkov are studying possible bid for 22% stake of Uralkali owned by Suleiman Kerimov. Kerimov's exit may result in change of strategy
Eoin Treacy's view The unilateral announcement by UralKali in July that it was
pulling out of an agreement that helped set international potash prices sent
the sector into a state of flux. As the lowest cost producers Uralkali was making
an outright play for market share which posed a direct threat to the viability
of higher cost producers. Related shares sold off aggressively. (Also see Comment
of the Day on July
Following a re-pricing of the sector, the majority found support in early August and have been gradually unwinding overextensions relative to their trend means since. News that Mr.Kerimov may be selling his stake in Uralkali has been welcomed and the sector rallied impressively today.
Uralkali has now unwound the majority of its oversold condition relative to the 200-day MA and while there is scope for some consolidation of recent gains, the low near $20 is likely to represent a medium-term nadir. Potash Corp of Saskatchewan, Mosiac and K+S have relatively similar patterns but have not rallied as much from their respective August lows.