Thread Content
A Quick Calculation for Potassium Chloride Author/Source: China Fertilizer Network Date: 2019-07-31 Clicks: 36 It’s already the end of July, and only now have all the figures for the first half of the year become available. Today, let’s do a quick calculation for potassium chloride. First, let’s start with an appetizer: the latest data on potassium fertilizer imports and exports for June. Firstly, potassium chloride imports in the first half of 2019 set a new record. Customs data show that the total import volume of potassium chloride in the first half of this year was 5.43 million tons, far higher than the 4.45 million tons recorded in the same period last year – which had already been the highest figure on record. Looking a few years further ahead, import volumes in the first half of those years were generally around 3.6 to 3.8 million tons, while the total import volume of potassium chloride for the whole year of 2010 was only 5.24 million tons. High import volumes, along with a somewhat sluggish market situation, have resulted in a large inventory in the ports. At the end of June, the stock of potassium chloride in ports was close to 3 million tons, a level that was significantly high by historical standards; now this figure is approaching 3.2 million tons, on the verge of setting a new all-time high. Secondly, domestic potassium production remains low. According to statistics from Zhongfei Net, during the 2015–2016 period China’s annual output of potassium chloride in physical terms was close to 8 million tons, reaching a historical peak. Thereafter, due to factors such as mineral sources, this output began to decline continuously; by 2017 it had dropped to almost 7 million tons. In the first half of this year, Qinghai’s output of potassium chloride was around 3 million tons. Based on these figures, it is estimated that this year’s total output will not differ much from last year’s 6.5 million tons, remaining relatively low. However, this figure is still better than earlier expectations, as production figures at the end of the first quarter declined significantly on a year-on-year basis. It is said that manufacturers will further increase production in the second half of the year; if everything goes well, it is possible for potassium chloride production to increase this year as well. Third, some quantities that remain to be determined. In addition to the uncertainty regarding the extent of production recovery in Qinghai in the second half of the year as mentioned above, there are two other points: firstly, many industry insiders report that downstream compound fertilizer factories have a large amount of domestically produced potassium available that they have not yet been able to utilize; detailed statistics on these existing stock levels are not yet available, but it is clear that this quantity is relatively large ； One issue is determining how much goods can still be delivered under the large-scale contracts from the previous year during the third quarter, when those contracts will be signed, and whether any new goods will be shipped in the fourth quarter; it’s currently impossible to determine the volume of imports for the future. In summary, one should not give up on large contracts regarding potassium chloride so easily, nor should one take risks by betting on price increases. In terms of figures, appropriate imports will still be necessary in the second half of the year to ensure safe use of fertilizers. However, due to weak demand, consumption is likely to continue declining; if imports are too high in the future, it will increase the burden on the market when it starts operating again next year. The supply available in the first half of the year has already exceeded 10 million tons, while last year’s apparent consumption was only a little over 14 million tons. Given the expected decline in demand, how much market activity remains possible in the second half of the year? (Adu)