Events
The signing and implementation of the large contract for the import of potash fertilizer by sea, and the import standard price will rise to $590 / ton in 2022. On February 15, 2022, China’s joint negotiation group on imported potash fertilizer reached an agreement with the international potash fertilizer supplier canpotex to determine the import price of standard potassium chloride in 2022 as cfr590 US dollars / ton, which is valid until December 31, 2022. From the price over the years, this year’s large contract price has reached a new high in recent five years, an increase of $343 / ton compared with the contract price of $247 / ton in 2021.
Comments
The rise in the price of large contracts is closely related to the sharp rise in the global market price of potassium chloride in 2021. In China, as of February 15, 2022, the average market price of potassium chloride in China was 3475 yuan / ton, up 70.85% year-on-year. The quotation of some manufacturers has been close to 4000 yuan / ton (equivalent to 630 US dollars / ton). Internationally, as of February 14, 2022, the FOB prices of potassium chloride in Russia and Vancouver were reported at US $625.5/t and US $610.0/t respectively, up 217.5% and 197.6% respectively compared with the beginning of 2021. The global price of potassium chloride returned to the upward channel after 12 years of downturn.
China’s potassium chloride is highly dependent on imports, and its price is greatly affected by the international market. China is short of potassium resources. According to the data of Baichuan Yingfu, China’s dependence on potassium chloride import remained between 50% – 60% from 2017 to 2021, which belongs to a variety highly dependent on imports. Therefore, China’s potassium chloride price is greatly affected by the international market. The large contract signed with canpotex will become an important reference standard for the pricing of potassium chloride in China, and the price of potassium chloride in China is expected to rise further.
The export of potash fertilizer from Belarus was sanctioned, and the global supply gap increased, driving up the price of potash fertilizer. From June to August 2021, the European Union and the United States announced sanctions on the potash industry in Belarus respectively, and the sanctions are continuing to ferment. Belarus is a large producer and exporter of potash fertilizer. According to NRCan data, the output and export of potash fertilizer in Belarus in 2020 accounted for about 17.6% and 21.0% of the global total respectively. At present, Lithuania has announced the termination of the potash transportation agreement between the state railway and Belarus. Due to the reasons of cost and transport capacity, Belarus has not yet determined a suitable alternative for the export of potash fertilizer, and the global potash fertilizer supply gap has increased, driving up the price of potash fertilizer.
With the advent of spring ploughing and the release of demand, the price of potassium chloride is expected to remain high, and the potassium fertilizer sector continues to benefit. As of February 14, 2022, China’s potassium chloride inventory was 258000 tons, a year-on-year decrease of 19.6%, a decrease of 38.4% compared with the beginning of last year, and the inventory was at a low level. At the same time, the advent of spring ploughing and increased demand further support the high price operation, and the industry continues to prosper, which is good for the potash fertilizer sector.
Investment advice
Under the background of upward business cycle of potash fertilizer industry, relevant leading targets may benefit, such as Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qinghai Salt Lake Industry Co.Ltd(000792) , Zangger mining, Qingdao East Steel Tower Stock Co.Ltd(002545) .
Risk tips
Upgrading of safety and environmental protection policies, repeated overseas epidemics, exchange rate changes, etc
