OREANDA-NEWS.  The US potash market enters the spring season on firmer ground in 2017 as strong demand and lower output look set to reduce North American inventory levels.

Low global potash prices drove North American producers to make production cuts in 2016. In total, about 5mn t/yr of nameplate capacity was removed through idling of mines and changes in product mixes over the last year.

North American production rates could shift during the first quarter of 2017 as Mosaic may bring its 2.6mn t/yr Colonsay, Saskatchewan, mine back online early in 2017 because of low inventory levels in Brazil and supply drawdowns in China and India. Mosaic idled Colonsay operations in July of 2016.

Additionally, PotashCorp will begin full production at its Rocanville, Saskatchewan, mine early next year following an eight-year expansion that doubled the facility's nameplate capacity to 6mn t/yr and significantly reduced production costs. PotashCorp expects to begin its Canpotex, Saskatchewan, proving run — producing at full rates to prove capacity — sometime during the first quarter of 2017. To account for the increased output, PotashCorp will curtail production at two other Saskatchewan mines beginning in the first quarter. In the third quarter of 2017, PotashCorp will transition the production at its Cory mine to white potash only, reducing the operational capacity of the facility by 600,000 t/yr to 800,000 t/yr.

K+S will begin production at its Greenfield Legacy solution mine in Saskatchewan next year. First production is expected in the second quarter of 2017, with full rates of 2mn t/yr reached by the end of the year.

The delayed settlement of the Chinese and Indian supply contracts in late July jump-started a recovery in potash prices after nearly two years of declines caused by global oversupply. Nola MOP barge and Corn Belt prices climbed by $45/st and $37.50/st, respectively, from the eight-year lows experienced in July 2016. The Nola MOP barges price rose to a high of $217.50/st fob Nola by the end of September before stabilizing in the low-$210s/st for the duration of the fall season, a $70/st decline from the price levels seen during the same time last year. MOP Corn Belt pricing improved to $245/st in late September, an $80/st discount to this time last year, and has held firm at that level all fall.