K+S Up Most in 2 Weeks; Forbes Says Uralkali Investor May Sell
Comment of the Day

September 10 2013

Commentary by Eoin Treacy

K+S Up Most in 2 Weeks; Forbes Says Uralkali Investor May Sell

This note by Chris Malpass for Bloomberg may be of interest to subscribers. Here is a section
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 30th).

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.

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