Core view
1. The Canadian railway giant may shut down, and the transportation of potash fertilizer is at risk. Canada The Pacific Securities Co.Ltd(601099) Railway Co., Ltd. is preparing to stop operation due to labor problems, the financial Associated Press reported. The company is Canada’s major railway supplier of potash fertilizer to overseas markets. Once The Pacific Securities Co.Ltd(601099) railway company shuts down, it will affect the transportation and export of Canadian Chinese potash fertilizer. Canada is a major producer and exporter of potash fertilizer, which is sold to many countries and regions around the world. In terms of output, the output of potash fertilizer in Canada in 2020 was 21.98 million tons, accounting for 31.8% of the global total. In terms of exports, Canada exported 21.96 million tons of potash fertilizer in 2020, accounting for 39.0% of global exports, making it the world’s largest exporter of potash fertilizer. Nutrien, the largest potash producer in Canada, sells its products to Latin America, China, India and other countries and regions around the world. The exports of major potash producing countries have been restricted one after another, and the global supply risk has increased again and again. Canada, Belarus and Russia are the three countries with the highest export volume of potash fertilizer in the world, accounting for 79% of the global export volume. In the second half of 2021, Belarus potash fertilizer was jointly sanctioned by Europe and the United States. Lithuania’s state-owned railway terminated its cooperation with Belarus potash fertilizer company, and Belarus potash fertilizer export faced difficulties. At the same time, Russia announced a temporary suspension of the global supply of potash fertilizer in February 2023. Once the Canadian railway is shut down, it will undoubtedly worsen the global potash supply. Recently, the international price of potash fertilizer has continued to rise and reached a new high. As of March 17, 2022, the FOB prices of potassium chloride in Vancouver, northwest Europe and Israel were USD 691.5, 761.5 and 789.0/t respectively, up by USD 97.50, 131.50 and 133.50/t respectively compared with March 1, with an increase of 11.0%, 11.0% and 13.0% during the week. In the long run, with the further intensification of global supply risk, we expect the price of potash fertilizer to continue to rise in 2022.
2. As of March 18, 2022, China’s chemical product price index reported 5711 points, down 3.3% on a weekly basis. Chemical products rose or fell, with monoammonium phosphate up 4.0% and n-butanol down 12.4%. In terms of monoammonium phosphate, the main reason for the price rise is that the plant maintenance and shutdown of manufacturers in some areas have not been restored, the enterprise inventory is very small, and the upstream liquid ammonia market trend continues to rise, driving the overall quotation to rise continuously; In terms of n-butanol, due to the impact of the epidemic, the transportation of some manufacturers is not smooth, and the mentality of downstream manufacturers is affected. At the same time, the price of crude oil falls and the cost support is insufficient.
3. In the past week, international natural gas prices have been mixed. As of March 18, 2022, the closing price of us NYMEX natural gas continuous futures rose by 2.9% weekly; The settlement price of UK IPE natural gas futures fell 20.9% this week. In the United States, the rise in natural gas prices may be related to the continuous decline in inventories. According to the latest EIA data, the EIA natural gas inventory fell by 79 billion cubic feet in the week ended March 11, and the inventory fell for 17 weeks. In Europe, as the weather in Europe gradually warmed up and the natural gas supply in Russia remained stable, investors’ concerns about the prospect of natural gas supply in Europe continued to weaken, leading to the continuous decline of natural gas prices.
4. Market review. Last week, among the 33 tertiary sub industries of CITIC chemical, 8 sectors rose or remained flat, and 25 sectors fell. Among them, the carbon fiber sector increased the most, with an increase of 6.5%; Synthetic resin sector fell the most, down 9.6%. In terms of individual stocks, the top three weekly gains were Jiangsu Jingxue Insulation Technology Co.Ltd(301010) , North Chemical Industries Co.Ltd(002246) , Shenzhen Rongda Photosensitive & Technology Co.Ltd(300576) , with weekly gains of 45.8%, 31.9% and 22.2% respectively; The top three weekly declines were Guangxi Hechi Chemical Co.Ltd(000953) , Jiangsu Yida Chemical Co.Ltd(300721) , Hubei Forbon Technology Co.Ltd(300387) , with weekly declines of 21.5%, 19.1% and 16% respectively.
Investment advice
Under the tight global potash supply, relevant 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) , etc.
Risk tips
Geopolitical changes, repeated overseas epidemics, exchange rate changes, etc.
