Thread Content
Future outlook for potassium fertilizers: Cautionary stance, not optimism. Author/Source: China Fertilizer Network. Date: 2019-09-11. Clicks: 6. At one time, “cautious optimism” was a common phrase in the fertilizer industry. As for the current potassium fertilizer market, I believe it would be wise to adopt a more cautious and less optimistic attitude. The short-term outlook is bearish due to ongoing uncertainties in the future. Where are the variables? As the saying goes, \"big contracts are involved in both price drops and increases.\" The suspension of imports of potassium chloride through border trade in recent months can be seen as a reflection of such uncertainties in the future. Since June, imports of potassium chloride through border trade have been suspended, and as of September no import orders have yet been placed; with zero imports for four consecutive months, the vacuum in the border trade market has forced downstream manufacturers in the Northeast region to turn to port markets where prices are relatively higher. Recently, some importers have said that orders for October or even later may not be placed, unless domestic prices rise to a certain level or foreign suppliers offer a reasonable price reduction. But there is still no news regarding large-scale contracts; it seems that whether importations can be resumed through border trade in the near future will depend mainly on whether domestic prices rise. From the opposite perspective, if there is no import of goods through border trade, could the price of potassium chloride in the port market rise? In other words, if large-scale contracts are delayed and not signed for too long, could domestic potassium chloride prices also shift from falling to rising? The answer is certainly yes; after all, nearly 50% of our potassium chloride relies on imports. Whether it’s the 3 million tons in stock at ports or the decline in international prices, time will change everything. So for now, it seems that the long-term trend in potassium chloride prices is downward, but this long term period isn’t actually very long; once it becomes too long, a new phase will begin. Previously, based on data from Zhongfei Net, the author conducted calculations and found that by the end of July, the total available supply of potassium chloride would be around 14.5 million tons, which is comparable to the apparent consumption level in 2018. However, considering factors such as fertilizer use safety, there should still be a stockpile of about 2 million tons of potassium chloride at the end of each year. Therefore, it is logical to assume that we will need to import another 2 million tons of potassium chloride during the five months from August to December. If large contracts are delayed for a long time, resulting in insufficient or even no imports, or if demand increases significantly, then in the future international prices might fall due to the delays in negotiating these large contracts in our country; yet domestic prices will still rise owing to shortages. It is important to note that the above merely describes \"variables\"; it is intended as a reminder of possible changes, and it is not a new forecast. The current outlook remains bearish, and this is not likely to change any time soon. The so-called \"cautious but not optimistic\" attitude means being vigilant regarding potential variables; being \"not optimistic\" is still a necessary stance at the moment, as delays in large-scale contracts have dual effects. Growth in demand is likely to be difficult in the short term and may even decline further. The supply of domestic potassium in the second half of the year poses risks, but there is also a possibility that it will exceed expectations. If cautious optimism means making a bet on price increases before the turning point arrives, then cautious pessimism means waiting until that turning point occurs before going along with the upward trend. To put it simply, for now the possibility and scope of a reversal in potassium chloride prices in the future seem low, while the likelihood and potential for a decline are relatively clear. So while it’s not impossible to expect an increase in potassium chloride prices, it might be better to wait a little longer rather than rush into decisions; the recent slight rebound doesn’t constitute a real turning point. To stay informed at any time about detailed and accurate market trends and related information regarding fertilizers such as potassium fertilizer, and to understand the developments in the fertilizer market, please continue to follow China Fertilizer Network (official website: www.fert.cn, mobile app: www.fert.cn/app, or WeChat official account: fert-cn). Feel free to call 0451-88001128 for inquiries; become a Zhongfei member and enjoy more privileges! Or visit the \"Talk about Fertilizers\" section on China Fertilizer Network to engage in more in-depth discussions on fertilizer market trends. To access it, follow the WeChat official account of China Fertilizer Network and click on \"Talk about Fertilizers\" under the \"Information Center\" section – you won’t want to miss these interesting sessions! (Adu)