Why This Move From Rio Tinto Is Bad News for Potash Stocks
The surprising decision by Rio Tinto (NYSE: RIO ) to move forward with a new potash mine has negative implications for the sector. The commodity already faces an oversupply issue, and BHP Billiton (NYSE: BHP ) desperately wants to move forward with a massive mine in Canada that would further pressure the commodity.
The news continues a bearish trend for PotashCorp (NYSE: POT ) , which continues to face increasing threats from competition that wants a share of the high margins for the commodity. The stock has seen a sharp rebound to the levels it traded at prior to the collapse of the Belarusian marketing arrangement about a year ago. Does the recent news from Rio Tinto portend a trend of supplies ready to pounce on any increase in potash demand that will halt the rise of potash stocks?
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