Israeli specialty chemicals company ICL’s share price has already nearly doubled over the past year and is up 250% since mid-202and could be set for further gains as commodity prices continue to rise. The company’s share price rose 3.96% on Wall Street yesterday to $10.55, giving a market cap of $13.868 billion.
In particular prices of potash, which represent 27% of ICL’s revenue, are set to rise further. In a recent report Bank of America analysts estimated that the price of potash will continue to climb due to the confrontation between Russia and Ukraine and sanctions to be imposed by the west on Belarus from April. Belarus government owned company Belaruskali provides 18% of the world’s potash consumption and the sanctions will create an opportunity for ICL, which has a less than 10% global market share, to capture a bigger market share.
The average price per ton that ICL received for potash in 2021, according to its financial reports was $337 per ton. Last week ICL signed a framework agreement to sell potash to China between 2022 and 2024 with the first order 700,000 metric tons priced at $590 per ton. But Bank of America analysts see potash’s current market price of $600 per ton rising to an all-time high of $1,000 per ton.
So while ICL’s 2021 financial results were very strong with full year, revenue of $6.955 billion, up 38% from $5.043 billion in 2020 and adjusted net profit of $824 million, up 219% from 2020, 2022 results should be even stronger.
Bank Hapoalim head of equity research Yaron Fridman said, "Potash supply will be tighter in 2022 together with larger demand. The supply side is negatively influenced by the embargo imposed by the western world on Belarus, the world’s second largest potash producer.
"The US administration imposed sanctions on the country in December 2021, which among other things prevents potash exports. The sanctions will come into effect in April and meanwhile Lithuania has halted the transports of potash on trains through it.
ICL is controlled by Idan Ofer’s Israel Corp. (TASE: ICL) and managed by CEO Raviv Zoller.
Published by Globes, Israel business news - en.globes.co.il - on February 23, 2022.
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