Event comments
Potassium chloride is highly dependent on imports and is greatly influenced by international factors. Potassium chloride is mainly used in agricultural production. It is a potassium fertilizer product with the largest consumption and wide application range. In China, potassium chloride is highly dependent on imports. According to the data of Baichuan Yingfu, the total import of potassium chloride in China accounted for about 58% of the apparent consumption from January to October 2021. Therefore, the international price of potassium chloride has a great impact on the Chinese market. At present, China’s potassium chloride importers are mainly Russia, Canada and Belarus. From January to October 2021, the import proportion of the above three countries is 32%, 25% and 23% respectively.
Since this year, the international price of potassium chloride has continued to rise. According to wind data, as of December 13, 2021, the FOB Vancouver spot middle price of potassium chloride was reported as US $624.5/ton, up 205% year-on-year and 134% in the past half year. The reasons for the rise in the international price of potassium chloride are: on the one hand, due to the recovery of the international macro-economy, Shenzhen Agricultural Products Group Co.Ltd(000061) price rise and the increase in the demand for chemical fertilizer; On the other hand, affected by the epidemic, the recovery of each link of the supply chain is different, and there is a certain mismatch in supply, resulting in a relative shortage of supply and a tight supply-demand pattern. At the same time, the repeated international epidemic, shipping interruption, rising energy prices and other factors also led to the slow recovery of production, the continuous shortage of supply, and the upward price of potassium chloride.
The increase of potassium chloride in China is low, and there is upward pressure driven by international prices. According to wind data, as of December 13, 2021, the market price of potassium chloride in East China was reported as 3200 yuan / ton, with a year-on-year increase of 73.0% and 52.4% in the past half year. Compared with international prices, the price of potassium chloride in China increased slightly in the same period. Under the influence of international prices, there is still some upward pressure on the price of potassium chloride in China.
Potassium chloride inventory is low and declining again, and China’s supply is still tight. On the one hand, the overall inventory level of potassium chloride is at a low level in recent three years. According to the data of Baichuan Yingfu, as of December 13, 2021, the inventory of China’s potassium chloride plant was 266000 tons, a year-on-year decrease of 43.4%, a decrease of 80% compared with the highest inventory of 1334000 tons in recent three years. On the other hand, potassium chloride stocks have declined again recently. Since July 2021, the inventory of potassium chloride has increased, reaching the recent peak of 305000 tons on November 12, 2021. With the advent of winter storage of chemical fertilizer, the inventory of potassium chloride decreased again, down 12.8% compared with the recent high point.
In the medium and long term, due to the repeated international epidemic, there is still great uncertainty in the recovery of production, the pattern of short supply will continue, and the rising state of international potassium chloride price may continue; In the short term, with the increase of fertilizer demand and the decline of inventory, the tight balance between supply and demand still needs to continue for some time. Considering many factors, we expect that the price of potassium chloride will remain high in the medium and short term, and the potash fertilizer industry will still be booming in the first half of 2022.
Investment advice
It is suggested to pay attention to the benefit targets under the continuous prosperity of potassium chloride industry, such as Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qinghai Salt Lake Industry Co.Ltd(000792) , Zangger mining, etc.
Risk statement
Slow global economic recovery, changes in international fertilizer import and export policies, exchange rate fluctuations, etc.
