Interesting comments about the new NH3 capacity came yesterday from Wayne Brownlee, EVP and CFO of Potash, during a Q&A with shareholders on 6/10/13:
So it’s very competitive, very healthy. We may well see a situation where excess capacity comes on in the United States. And we may see some more challenging times on ammonia prices than we’ve seen.
[question about supply/demand imbalance in nitrogen: “Is there is going to be too much U.S. Greenfield belt, is that the view?”]
Well, too much for who, or for what, or for what target. The nice thing about United States is that there is a lot of room to displace the imports. And they’re going to displace imports from far afield before they’re going to displace Trinidad or before they displace Canadian tons just with logistical and freight advantages that we have there.
If you go on the announced capacity increases, you get yourself worried about the supply. If you go on the most likely scenario in terms of what really comes on, I don’t think that we’re too worried about it. It will displace some imports, but that is the cushion on nitrogen …
We’re already seeing some project deferral announcements that had happened from competitors. Those projects aren’t cheap. They take a long time to deliver still and it’s one thing to say you’re looking at something and it’s another thing to get the financing with actual deliver on it.
And so, probably more supply but I don’t think that it’s going to result in crumbling of the United States nitrogen business in the next five years. As you get down further, it really depends on longer term scenarios in terms of what happens to gas in United States: is there increased utilization of it, especially from utilities?
So that could draw demand up so that may have an impact and then the question is how much shale gas are we going to find around the world, and how quickly does it get developed, what’s going to happen to the competitive environment around the world.
And so, I think that there are bigger questions that are more difficult to answer in 10 years time. But I think or what I would call the medium-term I think that we feel very comfortable and even from the point of view that the capacity just can’t get built that quickly.
Full transcript available at Seeking Alpha.