April 15, 2011 / 6:43 AM / 8 years ago

UPDATE 2-K+S will consider more potash price increases

* Says to think about further markups after Easter holidays

* Confirms 2011 outlook for marked gain in sales, profit

* Previous price hikes have been fully accepted -unit head

* Shares up 1.5 pct, among top DAX gainers

(Adds shares, analysts’ comment)

By Ludwig Burger

MERKERS, Germany, April 15 (Reuters) - German potash miner K+S SDFG.DE will consider more fertiliser price increases in its main European market with farmers unfazed by a price hike in March.

K+S said demand from fertiliser wholesalers remained strong, as the spring fertilising season for European farmers which accounts for more than half of the company’s potash sales, gets into full swing.

“Our price increases have been realised in full. Confidence has returned to the business,” said the head of the group’s fertiliser unit, Joachim Felker. “Nobody in wholesale trade is expecting that there won’t be (further) price increases.”

“After Easter (April 22-25) we will provide a new price guidance,” said Chief Executive Norbert Steiner, adding that the agriculture sector would be given time to digest the recent price increase and that any further markups would be moderate.

Last month, K+S raised the price of its standard granular potash in Europe by 5.4 percent to 353 euros ($508) per tonne, following a 5.7 percent markup in December. [ID:nWEA7378]

He also confirmed the group’s previous outlook for 2011 sales and operating profit to rise significantly from last year.

Shares in K+S climbed 1.5 percent to 53.76 euros at 1239 GMT, among the top gainers on the DAX blue-chip index .GDAXI.

“This fully confirms our view that the latest (price) hike ... announced four weeks ago was not the last one.” said Equinet analyst Michael Schaefer, adding he now expected the next price rise to be between 15 euros and 20 euros.

The executives’ remarks prompted analyst Harald Gruber at Silvia Quandt Research to reiterate his “bull case” view of K+S.

“The initiative (to lift prices further) is called for as wholesalers are bullish on their business, obviously registering firm demand from farmers,” Gruber wrote in a note.

Demand for potash was hit hard by the economic downturn as investors rushed into, and then later abandoned, agricultural commodities.

Many farmers had suspended use of potash during the crisis because the mineral stays in the soil for longer than other fertiliser types such as nitrogen.

This created pent-up demand with farmers scrambling to boost their yields after prices for key crops such as wheat, corn and soy surged to two-and-a-half year highs earlier this year.

But K+S, which acquired a Canadian mining licence by taking over Potash One in November, will not be able to increase volumes to tap this trend before 2015, when the Canadian project is due to come on stream, CEO Steiner said.

The group’s output capacity will be limited to about 7 million tonnes of potash products this year because it stopped mining an unprofitable product type and also because of upgrades it needs to make at its main German site Werra to reduce salty waste water. (Editing by Mike Nesbit) ($1=.6945 euros)

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