Enemy media: Yemeni operations threaten one-third of Israeli company ICL’s potash exports

The Hebrew website “The Marker” stated that the ability of the Yemeni armed forces to prevent ships associated with Israel from crossing the Red Sea could jeopardize ICL’s ability to use this maritime route, potentially resulting in the loss of one-third of its exports.

Exclusive Translation / Al-Khabar Al-Yemeni:

The company might be forced to redirect its potash exports to East Asia through the port of Ashdod. This would incur significant costs and extend sailing time by at least two additional weeks through Cape of Good Hope, or the company may have to increase cargo insurance premiums, according to the website.

The website mentioned that changing the shipping route would erode a significant portion of the export profits to East Asian countries, particularly the Indian market, which traditionally served as a profitable market for the company due to sailing time and lower transportation costs to India.

The website also highlighted that in March 2022, the company signed a five-year agreement with the Indian fertilizer import company IPL. According to the agreement, ICL would supply the Indian company with 600,000 tons of potash in 2023, with an option for the Indian company to increase the contract by 50,000 tons. The volume could reach 650,000 tons with the Indian company’s option for 2024–2027, allowing the Indian market to accommodate 15% of the Israeli company’s production capacity in occupied Palestine.

The website further explained that the Chinese market is more importance to ICL. After signing an agreement with Chinese fertilizer import companies, the company is set to market 800,000 tons of potash to China in 2023, with the option for customers to increase the marketed quantity by 350,000 tons. Therefore, the Chinese market CL could purchase 20%–29% of ICL’s potash production capacity in Israel in 2023.

Since potash is a commodity and ICL does not have a significant impact on its price, which is mostly determined by producers in North America and Russia, the cost of transportation has a significant impact on profitability.

From January to September of 2023, ICL’s profits in the potash sector amounted to $546 million, while the sector as a whole made $1.8 billion in 2022. Operating profits for the full year 2022 were $3.5 billion, and from January to September of 2023, they were $992 million.

The website also mentioned that ZIM, one of the largest Israeli maritime transport companies, could be harmed by Yemeni operations, as the company’s transportation volume through the Suez Canal in the first half of 2023 accounted for 14%.

ZIM’s CEO, Eli Glickman, stated that most of the company’s ships are leased, so they would not be required to sail under the Israeli flag, and the ships it owns would be used on routes unrelated to the Yemeni threat.

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