Shutdown of Canadian CP Railway: according to Bloomberg, Canadian Labor Minister Seamus O’Regan said in a statement on twitter that Canada The Pacific Securities Co.Ltd(601099) railway Ltd The reason why the company and the leadership failed to negotiate the solution on February 20, 2022 is that the company has not entered the state of shutdown. Previously, on March 16, 2022, CP announced that it had sent a 72 hour notice to the Canadian railway and train Union (tcrc). If the leadership of the Union and the company could not reach a negotiated settlement or agree to a binding arbitration, tcrc train and engine employees would be prohibited from entering on March 20. According to the Wall Street Journal, since September 2021, CP has been discussing or mediating contracts with tcrc to seek some improvements in wages, pensions and benefits.
The main operator of Canadian potash fertilizer export has a significant impact on the global potash fertilizer supply chain: CP company is the second largest railway company in Canada and the main operator of Canadian potash fertilizer export. On December 23, 2021, the company announced that it had signed a new long-term agreement with Canadian potash exporter canpotex company to further consolidate the long-term relationship between the two companies. According to the announcement, as a follow-up to the ten-year agreement between the two companies that will expire in 2022, the new seven-year contract will last until 2028. At present, CP company, as the main railway transportation company of Canadian potash fertilizer, accounts for a large proportion of Canadian potash fertilizer exports. According to the Canadian government network, Canada accounted for 39.3% of global potash fertilizer exports in 2020. At the same time, according to trains, CP company will transport about 12 million tons of potash fertilizer to 40 overseas countries every year, accounting for more than 50% of Canada’s 21.961 million tons of potash fertilizer (converted into potassium chloride) exports in 2020. The shutdown of the company will delay the transportation of Canadian potash fertilizer and other fertilizers before the spring planting season, which will significantly affect the transportation and export of Canadian potash fertilizer. Natasha steenka, a spokesman for canpotex, said the CP strike would have a “serious impact” on the transportation of potash to the port and to overseas buyers. According to Ken Seitz, interim CEO of nutrien, on March 16, 2022, if the CP railway is closed for a few days, nutrien may need to reduce its potash production in Saskatchewan mines and further reduce the global potash supply.
The conflict between Russia and Ukraine is superimposed with Belarus sanctions, and the global potash supply has faced great uncertainty: the continuous fermentation of Belarus sanctions and Russia Ukraine conflict since 2022 has had a significant impact on the export of potash from Russia and Belarus. According to Argus, Russia and Belarus are the second and third largest potash producers in the world. Under the background of geographical conflict, the transportation of chemical fertilizer in Russia has been greatly affected. On March 4, 2022, the Russian Ministry of industry and trade has proposed to suspend the export of chemical fertilizer. Under this background, the suspension of CP company will further aggravate the uncertainty of global potash supply. According to the Canadian government network, Canada, Belarus and Russia accounted for 79.7% of global potash fertilizer exports in 2020. At present, there is great uncertainty in the supply of the world’s top three potash fertilizer exporting countries, and the global potash fertilizer price is expected to continue to increase.
Investment suggestion: the uncertainty of global potash supply will provide strong support for potash price. It is suggested to pay attention to Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qingdao East Steel Tower Stock Co.Ltd(002545) , Qinghai Salt Lake Industry Co.Ltd(000792) .
Risk tips: the implementation of industrial policies exceeded expectations, and the development of International Geopolitics exceeded expectations
