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It is said that winter storage depends on urea; urea prices seem set to soar. What about potassium chloride? Author/Source: China Fertilizer Network Date: 2019-12-02 Clicks: 29 This year’s winter stockpiling of fertilizers has not only been delayed; it seems to have completely disappeared! Many in the industry once said that \"if urea prices don’t change, winter storage levels won’t change either.\" Yet in recent days, urea prices have seen a rebound, with local price increases reaching as much as 100 yuan per ton in just a short period of time. What’s going on? The first step in the urea price surge was taking advantage of the \"opportunities\" for urea exports arising from tenders in India; some companies used low prices to create a shortage of available stock, thus kicking off this wave of price increases ； In the second step, large orders from the Fed appear in the local market, providing even stronger reasons for price increases ； In the third step, prices finally rise; other manufacturers follow suit, either by taking advantage of the situation or as part of a strategic maneuver, to see how downstream parties react ； Step four: Local environmental pressures are intensifying; some manufacturers may suspend production for maintenance. Therefore, we’re taking the bold step of raising prices, hoping that this benefits both you and us. In summary, the increase in urea prices has both real and fictitious elements, but the element of being \"forced\" to raise them is evident. A sharp rise is not very realistic; it is said that prices in some areas have already started to drop slightly, so the market situation may not really be improving. It’s just that manufacturers are in a very difficult situation – they’re on the verge of going crazy! And isn’t the same predicament true for other fat varieties as well? But anyway, urea prices rose at least this time; potassium fertilizer prices are almost at their peak yet still continue to decline. The price of potassium chloride has continued to fall recently; this is despite the large contracts signed in India at a high price of 280 dollars, despite the rebound in urea prices, and even during these days when cross-border trade has finally resumed imports! After a pause of nearly half a year, the much-anticipated potassium chloride for border trade has seen its imports resume, with deliveries starting last weekend. This time, the variety range is quite wide, but the quantity isn’t large. Moreover, just before the goods arrived, the price in Bawikuan Port had risen slightly. Yet in just two weeks since the preliminary quotes were issued, the prices have kept falling, to an extent that it’s almost unbelievable. So, starting from the news at the phosphate and compound fertilizer conference that major contracts would not be initiated until after the Spring Festival, to the lack of any market recovery, and now to the decline in the price of border-trade potassium chloride—what insights does this bring to the market? Firstly, potassium chloride imports will decline; however, demand remains weak. At least in the short term, the current situation of oversupply is unlikely to change. If the above statements are not convincing, then let’s speak with data. Currently, the total stock of potassium chloride in ports, excluding that held for national reserves and in bonded areas, is around 1.8 million tons. The total inventory of domestic potassium production facilities in Qinghai, together with the output produced before last year, amounts to about 2 million tons. With imports resuming through border trade, these figures combined represent roughly one-third of the annual consumption volume of potassium chloride. Of course, the product mix at the port and the shipment of domestically produced potassium are also factors that need to be taken into account, but the continuous arrival of goods in the free trade zone is something that requires attention as well. In short, let the major contracts be postponed; at least no major problems should arise in the short term. Secondly, the monthly prices agreed upon for the resumption of imports through border trade are much lower than the prices in the large contracts signed by India not long ago. Meanwhile, prices in the spot markets of Southeast Asia and Brazil have also been declining recently. With the renewal of China’s large contracts being postponed yet again, the pressure on foreign suppliers is evident. Given the current situation, we still have enough leverage to secure an even lower price when negotiating large contracts after next year’s Spring Festival. So what the market needs to worry about is the possibility that prices might rise due to speculation, only for them to fall again during the critical period of spot prices next spring; in such fluctuations, is it more likely to present opportunities for profit or rather to turn one into a victim of these price changes? The author might be spreading “negative” ideas again, but I am the author for everyone, not the author for sellers. Often, being an analyst is a unpopular profession – buyers criticize them when prices rise, and sellers get angry at them when prices fall… It’s difficult in such market conditions, and it’s tough for analysts as well. I hope everyone can persevere through difficulties and remember to share their successes when things are going well. In fact, it’s very difficult to obtain potassium chloride at the moment, and the future will undoubtedly be full of challenges. But on the other hand, it’s simple as well – considering prices, there probably won’t be much room for decline, at least the rate of decline will be relatively slow. On the upstream side, one must face reality; meanwhile, if possible, they still need to hold their ground – it’s already very difficult. Therefore, it’s not practical for the downstream side to try to drive down prices. If purchasing is necessary, then there’s no point in delaying any longer! (Adu)