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Different 2950 values, but the same 6666. Author/Source: China Fertilizer Network. Date: 2019-09-11. Clicks: 6. On September 6, the Yunnan Province branch of China National Tobacco Corporation issued the \"2020 Provincial Procurement Plan for Potassium Sulfate Used in Tobacco Production,\" marking the onset of the bidding process for potassium sulfate used in tobacco production this year. Earlier, on June 6, the Fujian Province branch of China National Tobacco Corporation issued the \"2019 Procurement Plan for Potassium Sulfate Used in Agriculture,\" signaling the start of such bidding processes for that purpose as well. In these two representative tenders, one was won at a price of “2950”, while in the other the bid at “2950” was rejected; different prices of “2950” will inevitably lead to different processes, but both scenarios are favorable for the market situation of potassium sulfate. Key points of the 2019 Yunnan Tobacco tender: For potassium sulfate used in tobacco production, bidders must have an annual production capacity of no less than 80,000 tons; joint bids are not accepted ； The total procurement volume is 180,000 tons, which is divided into four lots: 72,000 tons, 54,000 tons, 36,000 tons, and 18,000 tons respectively. Bidders may submit bids for Lots 1 to 4 based on their own circumstances, but they are allowed to win bids for a maximum of two lots ； The bid limit is 2,950 yuan ； The delivery location is at the railway platform designated by the tenderer, on the vehicle deck. Water-soluble potassium sulfate: Consortium bids are not accepted, but there is no restriction on whether the bidder is a manufacturing enterprise or a distributor ； The purchase quantity is approximately 3,494.415 tons ； The bid limit is 3,499 yuan ； The delivery location is the site designated by the Tobacco Fertilizer Company (each tobacco leaf processing station). Key points of the 2018 Yunnan Tobacco tender: For potassium sulfate used in tobacco production, bidders must have an annual production capacity of no less than 80,000 tons; joint bids are not accepted ； The total procurement volume is 180,000 tons, allocated across four bid sections: 54,000 tons, 54,000 tons, 45,000 tons, and 27,000 tons respectively. Bidders may submit bids for Bid Sections 1 to 4 based on their own circumstances, but they are allowed to win bids for a maximum of two of these sections ； The bid limit is 3,150 yuan ； The delivery location is at the railway platform designated by the tenderer, on the vehicle deck. (The bidding was successful in one attempt; the winning bid prices for each bid segment range from 3,000 to 3,140 yuan.) Water-soluble potassium sulfate: Joint bids are not accepted, but there is no restriction on whether the bidder is a manufacturing enterprise or a distributor ； The purchase quantity is approximately 2,837.4 tons ； The bid limit is 3,540 yuan ； The delivery location is the site designated by the Tobacco Fertilizer Company (each tobacco leaf processing station). (The bidding was successful in one attempt, with the winning bid price being 3,470 yuan.) Key points of the 2019 Fujian Tobacco bidding process: Bidders must have an annual production capacity of at least 100,000 tons of potassium sulfate, and joint bids are not accepted ； The procurement is divided into 5 lots, totaling 335.3 million tons, but bidding must be carried out as a single contract package ； The bid threshold for first-class products is 2,850 yuan, while that for high-quality products is 2,964 yuan ； The delivery location can be reached by rail or road transport. (Two bidding attempts failed; in the end, the best bid through competitive negotiation was 2,950 yuan.) Different amounts of 2,950, but still the same 6,666. The above information on past bids from 2018 is provided merely for those who are interested or curious to compare things; what’s more important is to discuss this year’s tobacco bidding situation. The final winning bid price for the Fujian tobacco tender was 2,950 yuan for top-quality products, with Luojia being the winner of the bid. This price is far higher than the typical selling prices offered by the company’s agents in the market at that time, which is clearly a positive factor for potassium sulfate used in water and salt systems ； And due to the two previous failures to secure bids, the Mannheim potassium sulfate plant has fully \"proven\" its disregard for a price of 2,950 yuan, which in turn provides positive psychological support for the overall potassium sulfate market. Today, the tendering for tobacco in Yunnan still involves a considerable volume and continues to attract significant attention. The bid threshold of 2,950 yuan for potassium sulfate in the water-salt system remains significantly higher than its market retail price; whereas the bid threshold of 3,499 yuan for water-soluble potassium sulfate is still far above the current market average price, even when delivery is made to the tobacco processing stations. From this perspective, this tender is naturally good news for the potassium sulfate market. (***Note: “Far higher than” does not mean that the threshold price set for Yunnan Tobacco is extremely high. Given a procurement volume of nearly 200,000 tons, Yunnan Tobacco must take supply security into consideration; therefore, it aims to attract as many bidders who meet the requirements as possible. Moreover, competition among these bidders ensures that the final winning bid price is lower than the threshold price, bringing it closer to the actual market conditions.) ) Some in the industry may be skeptical, arguing that the current market conditions for potassium sulfate are not favorable, and competition among bidders could intensify. If the winning bid price is lower than expected, it could expose underlying pressures within the industry, leading to an accelerated decline in the price of potassium sulfate. In fact, we can look at this from another perspective: the current market situation shows that the price of potassium sulfate has clearly weakened, factories are under significant sales pressure, inventory levels are increasing, and prices are falling. Therefore, manufacturers need to accept the fact of price cuts and give priority to winning bids in order to alleviate their sales pressures ； Moreover, due to significant cost pressures, a bid threshold of 2,950 yuan is quite costly for manufacturers in Mannheim; therefore, competition among potassium sulfate producers is likely to remain limited, and it is unlikely that prices will be drastically reduced as a means of competing. Furthermore, even if we consider the worst-case scenario, 180,000 tons of demand is still better than nothing, right? (Adu)