Core view
Recent situation: since 2021, the global market price of potassium chloride has continued to rise. In recent years, the price trend of potassium chloride in China is close to that in the world. In China, the average market price of potassium chloride increased from 2000 yuan / ton at the beginning of 2021 to 3200 yuan / ton at the end of the year, and continued to rise at the beginning of 2022. As of February 14, 2022, the average market price of potassium chloride in China has exceeded 3470 yuan / ton, up 70.85% year-on-year. Internationally, as of February 14, 2022, the FOB prices of potassium chloride in Russia, Vancouver and northwest Europe were reported at US $625.5/ton, US $610.0/ton and US $631.5/ton respectively, up 217.5%, 197.6% and 221.4% respectively compared with the beginning of 2021. The global price of potassium chloride returned to the upward channel after 12 years of downturn.
The global supply gap has increased and the growth rate of supply has slowed down. 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 transportation capacity, the appropriate transportation scheme for the export of Belarus potash fertilizer has not been determined, the global supply and demand is mismatched, and the supply gap has been formed. Globally, the growth rate of global potash production has gradually slowed down from 6.8% since 2018. FAO expects that the growth rate of potash production will drop to 1.7% by 2021. Combined with the above situation, under the background of sanctions on the export of potash fertilizer from Belarus and the mismatch between global supply and demand, we expect the supply of potash fertilizer to tighten in the short term.
The downstream Shenzhen Agricultural Products Group Co.Ltd(000061) boom is upward, and the demand for potash fertilizer is growing steadily. In the short and medium term, Shenzhen Agricultural Products Group Co.Ltd(000061) prices have risen and farmers' planting enthusiasm has increased. From the beginning of 2020 to February 11, 2022, the CBOT futures settlement prices of corn, wheat and soybean increased by 66.3%, 42.4% and 65.5% respectively, and are still in the upward channel. Shenzhen Agricultural Products Group Co.Ltd(000061) the rising price has driven the improvement of farmers' planting enthusiasm, thus driving the growth of potash demand. In the long run, the global Shenzhen Agricultural Products Group Co.Ltd(000061) cultivated area still shows an upward trend. According to oecd-fao prediction, by 2030, the global main Shenzhen Agricultural Products Group Co.Ltd(000061) cultivated area will increase by more than 8 million hectares compared with 2021, including corn by 4.3% and soybean by 5.6%. The growth of planting area helps to drive the growth of potash demand.
China is highly dependent on imports and its inventory continues to decline. China is short of potassium resources. From 2017 to 2021, the dependence on potassium chloride import remained at a high level of 50% - 60%. Therefore, the demand for potassium chloride in China is strong, and the production and sales of enterprises are relatively stable. As of February 14, 2022, China's potassium chloride inventory was 258000 tons, a year-on-year decrease of 19.6% and a decrease of 38.4% compared with the beginning of last year. With the advent of spring ploughing, China's demand for potassium chloride will be released, and the inventory may decline further.
Combined with the above views, in the short term, Belarus has been sanctioned internationally and the global supply and demand mismatch has formed a supply gap. With the advent of spring ploughing in the northern hemisphere, the demand for potassium fertilizer will be further released, and the supply will be tight in the future. In the long run, the growth rate of global potash supply will slow down in the future, and the upward agricultural boom will drive the stable growth of potash demand. We expect that the potash fertilizer industry is expected to maintain an upward trend in 2022.
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, abnormal fluctuations in potash prices, reduction of China's salt lake resources, exchange rate changes, etc.
