Israel Chemicals (ICL)'s Potash Supply Faces Challenges Due to the Red Sea Crisis

On February 29, ICL (Israel Chemical Ltd., ICL.N) announced its Q4 2023 performance, achieving an annual sales revenue of $7.5 billion and an adjusted EBITDA of $1.8 billion, with the fourth quarter contributing $1.7 billion in sales and $400 million in EBITDA.

Notably, production was hampered due to operational challenges at the Dead Sea and increased transportation costs caused by interruptions in the Red Sea and Panama.

In 2023, ICL produced 4.42 million tons of potash, sold 4.68 million tons, and held an inventory of 280,000 tons. The Dead Sea's production was down by 271,000 tons year-on-year, mainly due to operational issues, adverse weather, the Israel-Palestine conflict, and planned halts in Spain. Despite an increase in sales volume (up by 184,000 tons from the previous year), particularly to Europe and China, transportation issues related to the Dead Sea adversely impacted shipments to India, Brazil, and the USA. The ongoing Red Sea crisis has exacerbated ICL's concerns over fertilizer supply, especially as the Northern Hemisphere enters the peak fertilization season.

Looking ahead to 2024, despite a decline in grain prices, global agricultural supply and demand remain stable. The global grain stock-to-use ratio is expected to decrease, reflecting continuous market stability. With steady inflation rates, economic growth, and stable grain prices, the outlook for the potash industry remains positive, boosting farmers' confidence and potentially increasing demand and prices for potash. However, ICL faces production and transportation challenges, especially with issues at the Dead Sea and the Panama Canal water crisis.

Meanwhile, Asia Potash International remains optimistic, having devised a strategy to expand potash production capacity unaffected by geopolitical conflicts, thus providing a growth opportunity amidst regional supply chain disruptions.

Attention: The above information is for commercial reference only due to the diversity of information collected, and Kelewell is not responsible for the authenticity of the data.