The average realized prices of potash have been on a declining trend, falling to $250 per metric ton, lower than 3Q14’s price of $281.
If the average realized price of potash hovers close to $200 per ton, Potash Corporation will find it challenging to fund its dividend obligations through internal sources.
In 3Q15, Potash Corporation (POT) paid cash dividends of $313 million or $0.38 per share. The company distributed more than what it earned in 3Q15.
Some investors are speculating that Potash Corporation will scale back its dividends. They question if the company will be able to maintain its high dividend yield.
In the week ending on November 20, the inventory levels of all base metals on the London Metal Exchange (or LME) fell by an average of 1.7%.
The major base metal mining companies Alcoa, BHP Billiton, and Rio Tinto ended the week in the positive while Freeport-McMoRan and Glencore ended the week in a loss.
In the week ending on November 20, except LME (London Metal Exchange) tin, all base metals traded at their multiyear lows.
In the week ending November 20, the strong dollar was one of the main factors behind the decline of base metals.
The weak economic situation in China, global base metal demand worries, and the strong dollar pushed base metals down in the week ending November 20.
November 20 saw precious metals retreat as gold, silver, and platinum fell 0.17%, 0.89%, and 0.26%, respectively, while palladium gained a whopping 3.3%.
Precious metals like platinum and palladium have been falling along with gold and silver. However, all precious metals saw a rise on November 19, 2015.
The fall in prices for gold and silver has caused the gold-silver ratio to stand at 75.84. So, it takes almost 75.8 ounces of silver to buy an ounce of gold.
China accounts for about half of the global steel production. China’s steel output declined by 3.1% YoY in October 2015 to 66.1 million tons.
Supply-side disruptions, including the Samarco accident, don’t mean much against the quickly worsening demand outlook. This should keep a cap on iron ore prices going forward.
The market is factoring in very low iron ore prices following the supply-and-demand mismatch scenario that began in mid-2014.
Financing is crucial because it stimulates consumption and investment in an economy. By tracking credit growth in China, investors can gauge patterns that forecast future demand.
In October, building sales in China increased by 12.6% year-over-year. On a year-to-date basis, building sales have increased by 14.9%.
China’s industrial production rose by just 5.6% in October compared to 5.7% in September and 6.1% in August. The reading is below market expectations of 5.8%.
For the week ended November 13, inventories were 86.5 million tons, according to the data collected from 44 ports in China by SteelHome. This is an increase of 9% from the levels at the end of June.
Iron ore shipments through Port Hedland slumped to 36.5 million tons in October after reaching a record high of 39.4 million tons in September 2015.