Matters:
Recently, according to the “potassium world” report, JSC belaruskali, a Belarusian potash producer, announced that it had encountered force majeure. Guoxin chemical’s view:
(1) potassium is one of the three essential nutrient elements for crop growth. Almost every crop needs an appropriate amount of potassium fertilizer. The main varieties of potassium fertilizer include potassium chloride, potassium sulfate, potassium nitrate and potassium magnesium sulfate. Due to its high nutrient concentration, rich resources and relatively low price, potassium chloride plays a leading role in agricultural production, accounting for more than 95% of the amount of potassium fertilizer applied.
(2) the global potassium resources are unevenly distributed, presenting an oligopoly situation. The global proven Potash (K2O) resources are about 250 billion tons, and the proven reserves (K2O) are about 3.7 billion tons. Canada, Russia and Belarus together account for more than 66% of the total global potash reserves, while China accounts for only 9.5%. The main consumers of potash fertilizer are China, Brazil, the United States and India, of which China’s potash fertilizer consumption accounts for about 25%. At present, the international potash fertilizer market is still monopolized by a few dominant enterprises, and the production capacity of the world’s top seven overseas potash fertilizer production enterprises accounts for as high as 83%.
(3) China is short of potash resources and highly dependent on foreign countries. In 2021, China’s potash fertilizer production capacity was about 8.6 million tons / year K2O, and its output was about 6.5 million tons K2O, a year-on-year decrease of 7.7%, the import volume was 7.566 million tons, a year-on-year decrease of 13.4%, and the export volume was 226000 tons, a year-on-year increase of 2.4%. China is the world’s largest potash fertilizer demander, with an external dependence of more than 50%.
(4) the price of potash fertilizer has risen sharply, and the price of large contract has reached a new high. The force majeure of Belarusian potash fertilizer manufacturers will aggravate the tense situation of global potash fertilizer supply and demand. With the effective control of the global epidemic, the recovery of potash demand is expected to be strong, and countries pay more attention to food security, which promotes the further increase of potash demand. In addition, the EU and the United States have imposed potash sanctions on Belarus and the rising sea freight, which has led to the obstruction of potash transportation, making the global potash market reach a 10-year high price. The quotation of 57% potassium chloride powder in Salt Lake increased from 1850 yuan / ton at the beginning of the year to 3150 yuan / ton at the end of the year, an increase of 70.3%. Recently, India and China have successively signed 2022 potassium fertilizer contracts with potash companies, with prices of $590 / ton CFR, a new high since 2008. Among them, China’s large contract price has increased by $343 / ton compared with 2021. Belarus is the world’s third largest producer of potash fertilizer and an important exporter of potash fertilizer. Due to the suspension of potash fertilizer goods circulation due to the sanctions imposed by the European Union and the United States, Belarus is expected to further aggravate the tense situation of potash fertilizer supply and demand. It is expected that the high popularity of potash fertilizer is expected to be maintained in 2022.
(5) investment suggestions: it is suggested to pay attention to Qinghai Salt Lake Industry Co.Ltd(000792) , Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) with potash fertilizer capacity.
(6) risk warning: macroeconomic fluctuations, local regional conflicts, infectious diseases and other systemic risks; The construction progress of new capacity of potash fertilizer may be lower than expected; The high price of potash fertilizer leads to lower downstream demand than expected.
