Q1 2023 Mosaic Co Earnings Call
Constraints remain even as demand in our key customer markets is seeing a recovery.
In North America spring planting season is well underway and farmers have returned to the market. The retailers have been slow to adjust their prices to global wholesale market prices. Despite that resistance growers are still committing and taking tons retailers are replenishing their inventories in April <unk>.
<unk> volumes saw a significant rebound in the north American shipments for both potash and phosphate combined mosaic shipped over 1 million tonnes of potash and phosphates to North American customers in April alone. This is the highest total we've seen in the last five years.
In Brazil, the barter ratio was supportive of demand and we expect commitments for the third quarter to ramp up with Prepays for fertilizer ahead of the software season, we expect Brazil will see a 9% to 10% increase in fertilizer shipments in 2023 over last year.
And India inventories for potash remained depleted as all purchases are going straight to the ground. After a year of reduced potash applications. Our potash contract was signed in April at a price of $422 per ton. In addition to providing necessary supply to Indian farmers the contract help stabilize.
Global pricing and <unk>.
Southeast Asia with the shortfall in edible oils globally. The palm market is driving strong demand globally, we're seeing good farmer economics, which suggest strong demand for phosphates and potash in 2023.
Given this landscape, we believe our business is well positioned to benefit from today's market conditions and phosphate. After two years of production issues caused by multiple hurricanes raw material shortages and other issues. The segment's performance has improved volumes during the quarter were higher than any quarter in 2022.
<unk> and our stripping margins also benefited from lower raw materials costs. We expect both of these trends to continue in 2023 in.
In the second quarter, we anticipate total sales volumes of one eight to 2 million tons with DAP.
<unk> prices at the plant in the range of $5 50 to $600 per ton.
In potash volumes began to move over the last week of the first quarter and that has continued into the second quarter, especially in North America, we expect demand to continue recovering throughout the year, our operations at Esterhazy and Belle <unk> are performing well aster hazy as one of the most efficient mines in the world and Bell <unk>.
<unk> should see benefit from lower natural gas costs in 2023.
At Astro hazy the last of the 13 miners is expected to come online later this year in total <unk> annual operational run rate should increase from $5 5 million tons last year to well over 6 million tons by the end of 2023.
We're committed to producing enough potash to meet market demand with the incremental output from Astra hazy, we believe we're producing what the market needs, which means we'll only restart clumsy when it's needed. We don't think this will be before the second half of the year.
In the second quarter, we expect total sales volumes of two to $2 2 million tons with MLP prices at the mine in the range of 325 to $375 per ton.
In Brazil first quarter results reflected the impact of declining prices and inventory Destocking as we said in February we expected our Q1 results to be impacted by Destocking of high priced inventory.
And now that is largely behind US looking ahead, we expect distribution margins to trend back towards the range of 30 to $40 a ton in the second quarter, 90% of those tons are already committed and priced.
Finally, I want to reiterate that we are committed to our capital allocation strategy of maintaining a strong balance sheet investing in our business and returning capital to shareholders.
We've met our commitment of reducing long term debt by $1 billion as such we expect to refinance the $900 million.
That matures later this year, our capex spending expectation this year remains unchanged at one three to $1 4 billion.
We're focused on high returning modest spend projects like our distribution facility in Palma raunchy expansion of micro Essentials at River view and the exploration of purified phosphoric acid.
Beyond that all excess free cash flow will be returned to shareholders through dividends and share buybacks.
During the quarter, we returned $608 million, which.
Which included $456 million of share repurchases and $152 million and special and regular dividends over the last 18 months, we've repurchased 15% of our float and still believe our shares represent very good value.
Our regular dividend today is 80 per share and our business positions us to consider further increases over time.
Before we move to the Q&A, let me summarize the global AG market remains constructive grain and oilseed supplies are tight and growers are incentive by favorable economics to apply nutrients.
We are already seeing the recovery in shipments in North America, and expect the rest of the world to follow.
Our production operations are performing well phosphate production has recovered and potash is benefiting from the most efficient mines in the world with swing capacity available to meet demand growth our balance sheet is strong and sustainable over the long term and we remain committed to returning significant capital to shareholders, while continuing to invest.
Efficiently in the business with that I'd like to move on to the Q&A portion of the call.
Before we move on to live Q&A as we've done in past quarters, we'd like to address some of the most common questions. We received after we published our earnings materials last night.
The first question that we received was how do we see AG market evolving over the rest of 2023.
Thank you.
There has been recent volatility in the agricultural markets. The fundamentals remains strong we're starting with a 25 year low stock to use ratio for grains and oilseeds now.
Much has been made of Brazil's larger than expected crop.
But offsetting that is problems in the Argentinian Europe Asia, and others, who are suffering from lower yields due to weather and under fertilization. Then as we look at going forward. This years, El Nino and Underutilization brings up a real risk to the 2023 AG.
Markets.
Now whether it is always unknown uncertainty, but as we've seen in recent past extreme weather events that negatively impact the AG production seem to have become more commonplace longer term. We do continue to see great potential for demand growth from biofuels, including increased call on oilseeds to feed renewable diesel.
Oil production as well as the enormous potential for sustainable aviation fuel.
We also believe that biofuel use will continue to rise in the medium term, even as cars transition towards electrification.
To sum up there is a rational basis for AG commodity prices to have eased off in recent weeks. However, there is strong fundamentals for AG bullishness.
Jack a follow on to the AG markets question, how do we see what you just said impacting fertilizer markets over the rest of this year.
Well, thank you I'd like to start by saying, what we're seeing in North America demonstrates.
Demonstrates just how strong the market could be this year. If we look at North America in the months of March and April those were both very strong months.
And up about 20% from where we were probably last year. So if I look forward. There I expect that will carryover to a stronger season in Brazil once the software.
<unk> get started and then it will continue for Asia and other regions.
Now I'm going to turn it over to Jenny to give a little more detail on the supply and demand of the fertilizer markets.
Sure Jack let me start from phosphate.
Control out of China is going to continue.
As the country is going through its.
Industry shift some production to industrial products.
Chinese government is going to continue to ensure their families to have affordable and available.
In country for their own production.
The export restriction is going to continue to be in place.
We believe this yet exports out of China will be somewhere between seven to 8 million tons.
With the tight supply of phosphate and the rebounding demand. We believe this is a very constructive market environment for phosphate.
Turning over to potash.
Export out of last year.
Significantly reduced from 12 million tons, two 5 million tonnes.
This year.
Fight multiple export cargoes being utilized to fight that.
We still don't believe that they have opportunity to export over 8 million tons out of that.
And protection also Russia.
And at risk.
Demand side as John mentioned, we are very.
Very strong spring season.
Now in the market when spring application has started.
A bigger volume winter field.
And we have seen price appreciation in the market.
And in the market in northern plants, where the spring season are still ongoing we have started to get inquiries from our customers for their summer demand.
Demand to summer and fall application are indicating a strong robust inc. For the full season in North America.
We believe what is happening.
America is going to happen in a market like Brazil.
They are going to prepare for their incoming seasons and we believe they will engage zone.
With a strong demand in Asia, we believe the buyers, while we engage and the price and volume well respond positively.
Thank you Jamie.
The next question, it's a follow on to what we just talked about given this constructive outlook on the fertilizer markets can you explain your thinking behind the guidance for pricing and volume, particularly for potash.
Thank you.
In potash, we guided to a normal quarter in North America, and a conservative view of the export market.
Early quarter demand in North America is stronger than we would have expected and certainly stronger than normal.
And history would say that the strong north American market will be followed in other markets such as Brazil and Asia. If this occurs there's certainly upside to both potash volume and price.
We have seen over and over again that once volumes move price falls.
Our next question is on Mosaiq flows onto <unk> results.
Could you provide more color on the quarter and how you see the performance of this segment evolving over the rest of the year.
Thank you.
In the distribution business the lead time to position products is quite long as.
As such when the second half volumes were lower than we expected. We ended the year with high priced inventory now we have sold most of this higher cost inventory down and expect the rest of the year to be much more normal.
Transitioning between cycles can temporarily expand or contract margins.
But through cycle margins remain unchanged for example in quarter four of 2022 and quarter. One of 2023 distribution margins were below historic levels, but they will return as market stability has achieved distribution margins in second quarter to the fourth quarter will be in the 30 to 40.
Range when averaged together.
Jeff one one other thing that I would note that I think is important in this discussion.
Is that we use average cost accounting for the cost of inventory in Brazil, and what that means is is that as prices sales prices are moving either up or down the average cost of inventory that we're recognizing in our results is moving a little slower than that market price and as a result.
During increasing price environment, Youll see expanding margins during declining price environments, youll see declining margins, but.
But that's why over the course of the year, we will see margins in the <unk>.
Target range that we've talked about that quarter to quarter as market prices are moving you can see a level of volatility in results.
Thank you Jack Clint Jenny operator, let's move on to the <unk> portion of the call.
Thank you we will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press Star then two in.
In the interest of time, please limit yourself to one question.
At this time, we'll pause momentarily to assemble our roster.
Our first question comes from Christopher Parkinson from Mizuho. Please go ahead.
Thank you so much.
Could you just give us a real quick update on how we should be thinking about your phosphate strip margins just across the.
Florida rock cost processing.
Where sulfur is trending relative to last year as well as your.
Ammonia mix, just any insights on how that should affect <unk>.
Margins throughout the balance of the year will be incredibly helpful. Thank you so much.
Yes, good morning, Chris Thank you.
If we look at.
We're projecting I guess stripping margins for the rest of the year you will have seen that the raw material prices have declined in the last while.
And obviously I think ive talked before.
The sulfur it takes four of a ton of sulfur basically to make a ton of DAP and about <unk> two of a ton of ammonia. So those those moves which have been quite material have allowed even though the price of phosphates has come down.
In time, the actual margins have stayed relatively constant throughout that period, and we see those margins staying relatively constant through the rest of the year. If we look at our cost of our actual inputs rock.
And conversion.
Our rock costs were driven a little higher this quarter basically because of lower volume.
Throughout the quarter, probably due to both.
While more than anything due to the grade of the area. We've been mining through and then if we look at conversion costs those have been impacted by higher variable and fixed costs, such as electricity and process chemicals for the balance of 2023, we believe are our maintenance capital.
Assets that we've invested in should really improve both volumes and costs as we move forward.
Our next question comes from Steve Burns from Bank of America. Please go ahead.
Thank you.
Great.
For potash to the second quarter.
It looks like it's roughly $75 a ton more than historical levels and yet it sounds like jenny's comments.
Would would.
Suggests the potash is the one that is going to be more curtailed in supply.
In 2023 as opposed to your <unk>.
Okay.
A couple of hundred dollars higher than historical prices. So all my questions.
What is fundamentally different here between P and K.
That would lead potash pricing to be generally weaker.
Is it a reflection of.
The second tier price coming out of Russia.
Okay. Thanks, Steve.
Yes, let me let me go through a couple of points there.
I think what I said earlier in the prepared questions or whatever the early questions still holds which is when.
When we were setting up the quarter and doing our preparation for this.
You're talking a couple of weeks ago, we haven't seen fully the impact of of what we would see in April and May or March and April we're seeing that come in better than we expected.
So from a volume perspective, we're pretty confident that that.
That guidance is at least very realistic and probably even we.
We could see upside on that in terms of pricing it's all about.
A combination of what's going to watch market for instance, it's product mix, whether we're selling the.
Standard grade product to some of the foreign markets, where the where the prices are lower and the transport is higher.
But then secondly.
How much is coming from North America, which is a strong market and a good both good pricing and relatively lower.
Transport, and then Brazil, which really Hasnt started yet so as we end the north American spring and move into the wind.
Wind down in North American spring and move into.
The quarter. Our question is going to be does Brazil come in to replace the higher cost or the higher priced north American product or do we get more of a balance on other exports in which case.
It just makes it a little hard to come up with a real good forecast for those prices, but I think the.
The.
Comment you make is more than valid there is definite tightness in the.
Potash market, we're seeing it probably strongest through North Africa, we're seeing it strong in.
In Europe , and I think we're going to see the impacts of it in Asia. So our view is they have to step up soon and start buying and the price will follow.
Our next question comes from Ben Theurer from Barclays. Please go ahead.
Yes. Thank you very much good morning, everyone. It's actually a good follow up just on the price development in the long term versus short term.
So if you think about all the comments you made around the structure challenges and obviously the tightness potash is just reiterate it.
But still prices are not coming up that much.
So maybe help us understand a little bit that in context prices being soft, but then at the same time you do consider some of capacity increases towards the back half of the year. So just to understand a little bit the rationale behind the volume.
You plan to put an additionally, given where prices are.
Yes sure.
So if I'm, if I'm going through potash again, it's the same story.
First we're going to see North America.
We didn't see a strong although we don't sell to it we didn't see a strong European market, but very quickly we're going to turn over to Europe to Brazil, and Latin America that market should start moving the software season starts basically at the start of the third quarter. If you will so they have to be moving product.
Towards the end of this.
This quarter. So June let's say, it's things have to start moving to get the product in place and time now we're coming into the year.
One thing that has to be understood as there was some pretty severe overshoot last year.
<unk> hi.
Usage went way down and I think we're seeing an overshoot downwards right now and so it's not following fundamentals, but long term it has to so Brazil and the rest of Latin America will start moving China is.
Very similar season to North America, and while they are getting more product from Belarus, and Russia across from rail Theyre still going to have to buy by potash. So so all of that stuff starts moving Asia has to move they need there.
Staples like rice.
To grow Indonesia, Malaysia needs the palm oil so all of those start moving.
We think it's still a constrained market and the short term.
Sentiment drive short term fundamentals drive the longer term. So we think right now it's just sentiment driven.
The next question comes from Andrew Wong from RBC Capital markets. Please go ahead.
Hi, Good morning, just a couple of questions about phosphate for me.
What are your expectations for phosphate segment.
Production run rate can we get back to you but.
<unk> seen kind of up to two 2 million tons per quarter coming out of that segment.
And then just a question on the Q2.
Pricing guidance.
Yesterday, we kind of saw.
And all of that that prices drop down to below 500, how does that factor into the guidance.
Thank you.
I'll, let Jeremy talk a little bit about the summer fill and whatnot, but.
Let me start by the run rate I think realistically our run rate's, probably been closer to $8 5 million tonnes per year since we shut down the plant city operations. So.
2.2 is probably at the top end I think a good quarter for US will now run probably 2% to one but we would expect on average probably in that range.
As we go forward, if everything is running well.
We've had as I mentioned in my prepared remarks, we have had weather related issues hurricane and shut us down for for a fair bit caused some real problems.
So we think that that number of say eight and a half is a better run rate than than let's say nine to nine five.
With all things sort of settled in looking at the possibilities.
Let me, let me talk good journey to talk a little bit I think what you're talking about is summer fill.
Reising on phosphates, So let me get journey to talk about that sure Andrew I believe the numbers that you talked about was the AAP NOLA box price.
We noticed that as well and as some of the trade publications reported.
Lower prices.
Maybe driven by the incoming input that goes the traders play on the index that team. So that's what we learned and that happened many times in the past it does not necessarily represent the real market value.
As we go through this in the setting we will see the real value to be reflected for summer fill.
We said that it is very normal.
The market.
Erica after spring season, we will see we might see a price a risk that it happened usually.
Every year.
But the price eventually is going to be supported by fundamentals as we discussed earlier lastly, we want to remind ourselves when we say phosphate to market.
Construction constructive market environment as the raw material prices coming down.
Impossible to do it.
Phosphate prices as well.
Don't forget the ever never ending logistics issues I am not convinced that product coming in through NOLA, certainly isn't going to get there in time for most of spring. So it is about summer fill not about spring demand.
And as you know the flooding and the Mrs. Upper Mississippi has met that's actually been shut down for a while or was.
Our next question comes from Joel Jackson from BMO Capital markets. Please go ahead.
Good morning, Jack.
Im going to go.
It'd either to the history and I went back to some of the presentations you gave in November of 2020, when you're presenting kind of your luck of all of the segments going forward. So I look at the photos aren't they're one and the <unk> you talked about transformation Juan Pablo transformation. Two played out where you can maybe add 2% to $20 million of earnings to Brazil.
By a different synergy transformations whatever.
And that was off the base you are you're cheating youre, achieving 30 to $40 a ton margins.
In 2019, 2020 already and Thats the guidance Youre getting now steady state. So I guess my question is.
What's happened so all of those opportunities.
So where you are now guiding to a $35 10 margin.
<unk> margins, you achieved 19 and 20.
Before you launched all these initiatives.
Let me start thanks Joel.
Let me start by saying that as the.
<unk>.
Distribution margin that we're referring to there and it's important to kind of think about that in terms of the overall if you think last year I think in distribution, we sold approximately 6 million tons of distribution tons.
So $6 5 million tons of distribution tons at I think it was about $60 on average. So if you think about that that's contributing 200 million of the of the $1 billion and I know I am.
Probably adding to the confusion of how hard it is to estimate what Brazil looks like.
But the distribution business itself is a pretty small piece of the overall, we make about $100 million a year of co product sales and we make the majority from R. R.
Our actual production business selling our.
And.
Feed TSP and SSP. So those are the ones that are really that.
And right now that market is moving pretty slowly we are in an off season and so what we're seeing is.
More of the unusual impact on.
Margin by that distribution business. If you will so I don't think anything is inconsistent with what we said in 2020.
Our next question comes from Richard <unk> from Wells Fargo. Please go ahead.
Great. Thanks for taking my question.
Just wanted to touch on the guidance for pricing in the second quarter.
The range, reflecting a higher percentage of lower priced export sales.
The reason for that in terms of.
Why more lower cost sales.
If demand is picking up in April and you're seeing it as well.
Thanks.
Yes, Thank you Richard.
Do you want to take that journey.
Yes.
I think it's just one too.
Mindful that Jack mentioned the guidance for the second quarter for potash pipe.
Mix of different market.
Between the North America and export market.
Excellent export market there are a mix of different.
Different grades for different destinations. So for example, the price to Brazil are can be very different enterprise to go to India because of the phrase differences and also great differences. So as we forecast the search.
Quarter. This is a combination of different price different product right and different market very strong North America price. We believe it is going to be carried over into our second quarter. The mix of the market will have impact in the guidance.
Let me, let me reiterate I think somebody may have been Steve Burns mentioned that.
Is this the aggressive behavior of the Russians and the <unk>.
Yes in a very.
The.
In a less robust market, which we've been in for the first part of the quarter. They have a bigger impact so in the export market right now they are being quite aggressive in.
They're having a bigger impact, but recognize they cant keep producing enough to impact the markets once they really start moving.
The next question comes from Atlanta Rodriguez from Credit Suisse. Please go ahead.
Thank you good morning, everyone I mean, Chuck a quick question on philosophy.
In the past 12, 18 months I mean potash prices have peak and have come down really hard like is there anything that mosaic can.
And as we could have done to mitigate that volatility.
This is something that has happened before potash prices get to those high levels I'll need to come down really hard quickly is there a better way to quote.
On could manage the price it.
Yes, potash is a commodity but it does anybody have the same.
Cost push aspect.
It does we have natural gas.
Dash is supposed to be different.
Any insight you can provide in depth.
Whats going on there.
Yes, Thanks, Ed Linde and look from our perspective.
The huge price peak.
The quick drops back down is certainly not how you'd like to see the markets perform.
We were saying that last year and I wouldn't change my view on that at all if you think back to <unk> got almost think back to the start of the Russian.
Our Russian invasion of Ukraine, where you had for instance, president ball scenario of Brazil was in Canada, asking for more product you had him in Russia talking to boot and looking for more potash.
Had this huge almost panic run on on potash.
And phosphates as Theyre trying to make sure they had enough for the season and the price got to the point where it was.
Literally.
At least from a psychological perspective.
On affordable So people took what we've talked about is the potash holiday.
I'll now youre seeing virtually the opposite where you're still in some markets and some of the retailers are trying to sell their high priced product they're resistant on dropping their prices to the market. So now youll see overshoot on the downside and.
<unk>.
That's kind of that system.
The highest were too high and now the lows are probably too low.
It'll balance out again, just like it did in <unk> nine.
But we have to get through the first phase of it what could we have done differently.
We were aware of the risk and we.
I think we talked about that risk and some of these meetings even so.
What can you do do you try and send more to those markets to make sure. They're well supplied we did that but then of course when things slowed down.
There is no.
There's no way around it so I'm not convinced that anything that the.
Buyers.
Good have done would have changed the.
The overall outcome.
Now this year again.
We're trying to supply.
And as people buy that will start balancing out.
As a reminder, if you have a question. Please press Star then one our next question comes from Joshua Spector from UBS. Please go ahead.
Hi, Good morning, this is <unk>.
Josh I just had two quick ones hopefully selling your potash volume guidance for the second quarter.
It sounds like you think North America is going to be up.
Okay.
If that's the case and that kind of split out like walk Canpotex is doing that in the second quarter what's implied.
It's implying that's kind of down 15% to 20% year on year. So I guess is that rod.
Yeah.
Why would it be down that much.
Taking less allocation there.
And secondly, just wanted to follow on from Jon's question on federal is on price.
Have you kind of say that normalized mid cycle EBITDA iron fertilizer advertise now hey could you split that between distribution and production David Baffles. Please.
Thanks.
Okay.
Yeah potash volume.
I think I said earlier we.
Have taken a relatively conservative view of.
International sales and so yes, our a portion of exports is a bit lower.
And when I say this I mean, we're looking right now and.
I think what I'd say is if north America keeps performing as it does we will be at the higher end of our guidance.
<unk>.
And if the international market comes back we'll be at the higher end of the guidance all I can say at this stage is probably there is.
We try to keep a balance but it is probably a little more upside potential than there is downside risk at this point it looks like although again.
Supply chain and everything else can become a risk in this.
The second one.
Brazil, Yes, and again, let me so let me kind of highlight Brazil, if you will.
I think you can look at Brazil as being.
50%.
<unk> earnings are going to be a production kind of.
Economics now you have to take into account the.
The fact that they are.
Producing right in the market. So I think that one's probably 50% of Brazil's earnings come from that.
30% come from.
The distribution business and the rest comes from other things like co products and whatnot. So that's kind of how we look at it.
And that's how we've tried to portray that business.
Our next question comes from Jeff Zekauskas from Jpmorgan. Please go ahead.
Thanks very much.
A couple of questions about potash.
NPS signed a contract for six months instead of the year this time in potash.
Why do you think why do you think they did that.
Short term contract.
Normally China Cui.
Quickly follows suit after India signs a contract and.
Maybe it gets $20 a ton better price and as you said the.
The Indians signed at $4 22, a tonne down from $5 90.
But the Chinese didnt.
Sign a contract down $20 per ton.
What do you make of that.
And.
Do you have an expectation for when the Chinese potash contract.
Okay. Thanks, Geoff let me start with India.
It was not India that drove the six month contractor it was the suppliers.
Including Canpotex and I don't like to normally speak for Canpotex, but I can tell you that we don't think the fundamentals are such that.
The price is going to still be at $4 20 to.
Six months from now or at least we thought there is pretty good upside potential. So that was the reason that was a six months not a year in.
In terms of China.
China and recognized sorry, let me finish the India thing the other thing with India, though is it hasn't really taken off tonnage wise because they havent established.
Subsidy program. So while there is a contract price the importers are still a little bit leery, because there isn't.
There isn't a subsidy guarantee for them, which means the PK plants are taking what they need but they are taking at hand to mouth. So it's a bit problematic and its.
More of a political and subsidy issue than it really is the.
On the ground demand in China, why it Didnt, China follow I think Theres a couple of reasons I think the first is they had the inventory that they needed for the short term and there is there.
They're looking for when do they really need product and recognize that some things have changed in China with.
With 2 million tonnes coming from the rail across from Kazakhstan with from Belarus, and another $2 million plus coming over the Urals from Euro Cali and the Russians.
And then 6 million tonnes coming from Qinghai Lake and that production.
Seaborne needs, while still there are less than they were before so.
Maybe we have to reassess what 2 million tons of inventory really means.
Because I think it allows them a little longer because theyre getting their basic needs now having said that I think by about mid year, they still need seaborne tons. So I think there's still a place for.
For them, but I will say and we've been saying this for years.
The relevance of the Chinese contract is becoming less and less overall, because they are less and less reliant on seaborne tons.
Our next question comes from Vincent Andrews from Morgan Stanley . Please go ahead.
Thank you and good morning, Chuck I'm, just trying to synthesize all the comments today about the market and price expectation and so forth in potash.
What are the sort of thresholds.
Youre anticipating crossing in the back half of the year that would get you to turn Colonsay on is it that youre looking for a certain increase in price from here or is it.
Waiting for China to come back into the seaborne market or what is it that that you guys are watching to.
To determine whether you're going to make that decision or not.
Thanks, Thanks Vincent.
<unk>.
If I'm thinking about <unk> in particular and I know there is one at least a sense question that said why are we talking about start restarting colons. They at all and really it's almost been a timing issue that every month that goes by Astra hazy increases thats capacity a little.
Bit to where I think now, we're probably going to be well over 6 million tons of capacity at Esther hazy in the second half of the year, we're going to be 3 million tons of capacity at bell plane and so overall, we've got 9 million tonnes of total capacity.
<unk> without Colons site, so I think.
Whether it is colons they come in.
I think if if the.
Export market really heats up and you start seeing good demand from China, good demand from India, Good man from Indonesia, Malaysia, Brazil start moving in Latin America.
Then youre.
Youre going to start to see the potential for us to not only.
Have the the need.
The inventory will get run down that we have at the plants and we may not be able to keep up with the nine and a half now if that only comes in lackluster.
<unk> probably doesn't run so kwanza is not is not really a price issue for kalonzo, because I think the profitability of clubs they would still be reasonably good at this level.
But.
I don't want to be stuffing product into a market.
Where there isn't a buyer or we just actually destroy the market we're in.
Not unlike what happened.
When BPC broke up and so I think there's a good case to be careful about how we bring that new that other production on its sitting there.
Maybe we have a little excess capacity that were.
The cost of holding it's high but there's enough uncertainty right now that I don't want to.
I don't want to risk not having it if that market comes back that strong.
This concludes our question and answer session I would like to turn the conference back over to Chuck <unk> for any closing remarks.
Okay. Thank you everyone. Let me conclude our call by reinforcing a couple of our key messages the agricultural commodity prices are still elevated.
This gives farmers strong incentive to maximize their yield and use fertilizer. So fertilizer demand is robust and volumes are starting to move quite strongly our operations are running well and our strong earnings and cash flow are allowing us to return significant capital to shareholders.
2023 is off to a good start for mosaic and we have a positive outlook for the remainder of the year. So with that thank you for joining our call have a great and safe day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Yeah.
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Today's presentation you may now disconnect.