Core view
1. Since the beginning of 2022, the price of potash fertilizer in China has risen sharply. According to wind data, as of April 29, 2022, the quotation of 60% powdered potassium in Qinghai Salt Lake and 60% powdered potassium in Shandong were 4380 and 4800 yuan / ton respectively, up 25.5% and 28.0% respectively compared with the beginning of the year; In terms of import, the quotation of Jiangsu Lianyungang Port Co.Ltd(601008) imported 60% red potassium and 62% potassium chloride from border trade Russia and Belarus were 4850 and 4900 yuan / ton respectively, up 29.3% and 25.6% respectively compared with the beginning of the year. China is highly dependent on the import of potash fertilizer, and its price and supply are greatly affected by the international market. According to the data of Baichuan Yingfu, China’s external dependence on potassium chloride was more than 51% from 2017 to 2021. Affected by the distribution of potash resources, the global potash supply presents a giant monopoly pattern. According to NRCan data, in 2020, the output of potash fertilizer in Canada, Russia and Belarus accounted for 31.8%, 20.0% and 17.6% of the global total respectively. China’s potash fertilizer is mainly imported from the above three countries, and China’s potash fertilizer supply and price are greatly affected by the international market. The global potash supply gap has been formed, and the price may remain high in the short term. Since June 2021, the export of potash fertilizer from Belarus and Russia has been restricted one after another, resulting in a supply gap of international potash fertilizer. In Belarus, in the second half of 2021, Europe and the United States successively announced sanctions against the Belarus potash industry. In January 2022, the Lithuanian government announced the suspension of the potash transport agreement between the state railway and Belarus, resulting in restrictions on the export and transport of potash fertilizer from Belarus. In Russia, affected by the conflict between Russia and Ukraine, in March 2022, the Russian Ministry of industry said it would suspend the export of chemical fertilizer to some countries and regions. In April 2022, Putin ordered to extend the export restrictions of Russian chemical fertilizer until August 31. Under the supply shortage, the international potash price may remain high in the short term. At present, China’s inventory is running at a low level, and the import volume has decreased. According to the data of Baichuan Yingfu, as of April 29, 2022, the inventory of potassium chloride was 321500 tons, down 243.70% from the beginning of 2020, at a historical low. Affected by global supply constraints, China’s imports of potash fertilizer decreased. From January to March 2022, China’s cumulative import of potassium chloride was 2.098 million tons, a decrease of 18.1% over the same period last year. On the whole, at present, the global potassium fertilizer supply is in short supply, and the superimposed inventory runs at a low level. In 2022, China’s potassium fertilizer price is easy to rise but difficult to fall.
2. As of April 29, 2022, the price index of China’s chemical products reported 5781 points, down 0.6% on a weekly basis. Chemical products were mixed, with urea up 3.3% and acetic acid down 7.4%. In terms of urea, the reason for the price rise is that the manufacturer’s shipment has improved, the inventory has decreased, and the downstream demand has increased, which promotes the rise of urea price. In terms of acetic acid, the price decline was mainly due to the accumulation of market inventory and the decline of downstream demand, resulting in downward pressure on the price.
3. Over the past week, international natural gas prices have risen sharply. As of April 29, 2022, the closing price of NYMEX natural gas continuous futures in the United States was reported at US $7.245/million BTU, up 12.1% this week. The main reason for the sharp rise in international natural gas prices is that Russia decided to suspend the supply of natural gas to Bulgaria and Poland from April 27, resulting in the decline of natural gas supply in the European market. The greater supply pressure has driven the international natural gas price to rise sharply.
4. Market review. Last week, among the 33 CITIC tertiary chemical sub industries, 7 sectors rose or remained flat last week, and 26 sectors fell. Among them, the carbon fiber sector increased the most, with an increase of 8.5%; Viscose block decreased the most, with a decrease of 12.1%. In terms of individual stocks, the top three weekly gains were Shanghai Aladdin Biochemical Technology Co.Ltd(688179) , Shandong Cynda Chemical Co.Ltd(603086) , Gch Technology Co.Ltd(688625) , with weekly gains of 22.5%, 18.8% and 18.3% respectively; The top three weekly declines were Jiangsu Dewei Advanced Materials Co.Ltd(300325) , Nanjing Chemical Fibre Co.Ltd(600889) , Ningbo Tianlong Electronics Co.Ltd(603266) , with weekly declines of 66.9%, 27.2% and 20.2% respectively.
Investment advice
Under the tight balance between supply and demand, the price of potash fertilizer remains high, and relevant production enterprises may benefit, such as Asia-Potash International Investment (Guangzhou) Co.Ltd(000893) , Qingdao East Steel Tower Stock Co.Ltd(002545) , Qinghai Salt Lake Industry Co.Ltd(000792) , Zangger mining, etc.
Risk tips
Exchange rate fluctuations, geopolitical changes, repeated outbreaks outside China, changes in macro industrial policies, etc.
