Do Norwegian’s grin? Surely that was a trickle of a smile at Yara International’s (YARIY.PK) annual update for investors on December 10.
The Norwegian fertilizer company reported that the nitrogen fertilizer market was headed for demand-driven price increases in the first half of 2010. Urea supply, a major form of nitrogen fertilizer, should remain tight in 2010 with only three projects likely to come on line. Supply (ex-China) in 2010 will increase by 3%, according to Deutsche Bank, while demand will climb 5%, the bank projects. Chinese exports are likely to remain limited in 2010 as higher production costs limit the competitiveness of Chinese urea. Yara International plants ran at about 63% of capacity in 2009 and these scenarios should result in a pickup to near 80% of capacity.
Time to up my targt price, I believe.
As of January 10, 2010 I’m raising my target price for Yara International to $53 a share by November 2010 from the prior target of $47.20. (For more on my other fertilizer stock Potash of Saskatchewan (POT) see my post http://jubakpicks.com/2010/01/05/update-potash-of-saskatchewan-pot-5/ )
Full disclosure: I own shares of Yara International in my personal portfolio.