UBS recently said that according to the latest survey of the global fertilizer industry. The global demand for potassium carbonate and potassium phosphate is growing, driven by the demand for biofuels in the United States. These two products serve as the main products of Israel Chemicals Group. The company’s share price is expected to grow by at least 15%.
In the first quarter of 2022, Israel Chemicals Group’s market sales reached $452 million. This represents a 57% year-over-year increase. UBS expects the company’s profits to continue to rise through 2023, driven by high prices for its fertilizer products. The average annual growth rate will be 37%.
UBS expects the supply of phosphate and potassium carbonate to become very tight as the demand for crops for biofuel production grows. Prices continue to rise. Biofuels have made a direct link between the energy and fertilizer sectors. And it is likely to gradually extend to the minerals sector as the pressure on energy demand increases.
For potassium carbonate, global production is currently very concentrated. The vast majority of mineral reserves are in the hands of the top three producers.
In June this year, Israel Chemicals signed a new contract for the supply of 1.1 million tons of potassium carbonate. It has raised the base price of potash, which was set at the time of the Global Fertilizer Industry Federation meeting in Turkey that month, by $50.
The entry of the agricultural season in Brazil, a major agricultural country, has also tightened the supply in the fertilizer market. For phosphate fertilizers, the production of phosphate fertilizers such as dihydrogen phosphate amines, which are mainly produced by the Israeli chemical industry, has doubled this year.
The U.S. biofuel market has had an impact on the global demand for phosphate fertilizers. Phosphate ore suppliers have begun to raise prices. Demand for phosphate fertilizer in India has also outstripped local supply. Therefore, profit margins for phosphate fertilizers are secure for the next 2-3 years.