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Strategies & Market Trends : Value Investing

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Jurgis Bekepuris

To: Spekulatius who wrote (51961)	7/31/2013 2:05:04 AM
From: Spekulatius	1 Recommendation of 78750

I read Uralkali's 2012 annual report. This is the company that started the whole thing today. They increased their capacity from 10.6M tons to 11.5M tons in 2011 and are expanding to 13M tons in 2013, even though they only sold 9.1M tons in 2012. Production cost is 62$/ton, so they won't go out of business selling at 300$/tons at all. This makes me think that this decision announced today did not happen on a whim, there is a long term plan behind it, namely grabbing market share. Otherwise the capacity buildout that has been underway for two years already would not make any sense. My logical conclusion is that this may not blow over and a price war could be for real, rather than being an empty threat. They have the capacity and cost structure to follow through, without getting hurt too badly themselves. uralkali.com (p. 52)

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