Makers of fertilizers that boost corn and palm growth are taking advantage of higher profit margins for uses in other industries, such as oil drilling and livestock feed, to ride out a severe slump.
Potash and phosphate prices touched multi-year lows last year due to a capacity glut and soft crop prices. Higher and more stable returns for some industrial applications are prompting producers to shift greater attention to what has been a sideline business for some.
Canada's Agrium Inc said on Tuesday that nearly one-sixth of production at its new Borger, Texas urea nitrogen plant will be diesel exhaust fluid (DEF), used to cut vehicle emissions, boosting the company's slice of industrial markets.
DEF offers generally higher and less volatile margins than agricultural urea markets, Agrium spokesman Richard Downey said.
Agrium's move follows Potash Corp of Saskatchewan's November announcement that it would halt production of red potash at its Cory, Saskatchewan mine to focus instead on white potash, which has applications in the pharmaceutical industry.
"We've got steady customers for it, so we need to continue to fill that market. There's no doubt there is demand for it," Potash Corp spokesman Randy Burton said.
K+S AG's new Legacy potash mine in Western Canada, opening this year, will produce industrial products along with common potash, spokesman Michael Wudonig said.
"In our view, industrial potash is a growing market," Wudonig said in an email.
K+S' revenue from industrial potash fell 6 percent in the first nine months of 2016 from the year-ago period, compared with a steeper plunge of 31 percent in common potash sales.
Sales of potash and phosphate for industrial or animal feed make up a small percentage of some producers' revenue, but margins are bigger than for fertilizer, said Andy Jung, director of market and strategic analyst at Mosaic Co.
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