Core view
The highest price of potassium chloride in history is close to 5000 yuan / ton. From 1995 to 2020, the price trend of potash fertilizer can be divided into three stages. In the first stage, before October 2003, the average import price of potassium chloride in China was maintained at about 110 US dollars / ton; In the second stage, from October 2003 to September 2008, the price of potassium chloride rose rapidly, with the highest price of 710 US dollars / ton (close to 5000 yuan / ton at the then exchange rate). Among them, from October 2003 to May 2005, the price first rose from 117 US dollars / ton to 213 US dollars / ton, an increase of 81.5%, which lasted 19 months. After May 2005, it fluctuated slightly around us $200 / t until March 2007; Subsequently, the price rose rapidly and reached the highest point in September 2008, with an increase of 225.2%, which lasted 18 months; In the third stage, the price fluctuated and fell. By the end of 2020, the price of potassium chloride had closed at US $224 / T, down 68.5% in about 12 years.
The price of potassium chloride ended the 12-year downturn and began to enter the upward channel. After 12 years of long decline, the price of potassium chloride approached the historical bottom at the beginning of 2021 and gradually rebounded upward. According to wind data, the FOB Vancouver spot middle price of potassium chloride is reported at $205 / ton at the beginning of 2021, at $217 / ton at the end of the first quarter, at $339.5/ton at the end of the second quarter, at $487 / ton at the end of the third quarter and at $627 / ton at the end of the fourth quarter, with an annual price increase of 205.6%.
The price rise of potassium chloride is mainly affected by supply and demand. On the demand side, at present, most of the global Shenzhen Agricultural Products Group Co.Ltd(000061) prices have risen, driving the demand for potassium fertilizer. As of January 5, 2022, the futures prices of CBOT corn, soybean and wheat have increased by 56.1%, 48.9% and 36.5% respectively compared with two years ago. On the supply side, the United States and the European Union recently announced sanctions against Belarus, which is a large producer of potash fertilizer, accounting for 17% of the global total in 2020. Belarus has been sanctioned by the United States, superimposed with repeated international epidemics and other factors, resulting in a certain shortage of supply in the global potash market. The supply and demand of potash fertilizer continues to be in tight balance, and the economy is expected to remain good in the first half of the year. Internationally, the current global potash supply continues to tighten, and with the arrival of the spring farming season in the northern hemisphere, the demand will gradually increase. In China, China’s potassium chloride inventory level is low, which supports the price. According to the data of Baichuan Yingfu, by the end of 2021, China’s potassium chloride inventory level was about 258000 tons, a year-on-year decrease of 42.4%. At the same time, combined with the boom duration of potash fertilizer in history, it is expected that the supply and demand of potash fertilizer industry will continue to be tight in the first half of 2022, and the boom degree of the industry will remain high.
Investment advice
Under the continuous prosperity of the potash fertilizer industry, relevant enterprises in the industry may benefit, such as Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Zangger mining, Qinghai Salt Lake Industry Co.Ltd(000792) , Qingdao East Steel Tower Stock Co.Ltd(002545) , etc.
Risk statement
Repeated overseas epidemics, slowing global economic recovery and international geopolitical changes.
