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Potassium sulfate is more effective than potassium chloride Author/Source: China Fertilizer Network Date: 2020-05-12 Clicks: 44 Before large-scale contracts for potassium chloride were signed, potassium sulfate also ended up being neglected along with it； Following the confirmation of the large-scale potassium chloride contract, the price of potassium sulfate is also continuing to fall. However, while potassium chloride producers are trying every means to break even, potassium sulfate producers, lacking any substantial pressure, are essentially just waiting patiently for the market to recover, even if prices do fall. In other words, potassium sulfate prices are also falling, but only the cost component is decreasing; the profit margin itself is only slightly reduced, and the situation isn’t severe. Overall, the market conditions for potassium sulfate are relatively better than those for potassium chloride, and this trend is set to continue. Firstly, the market performed well in spring, and there is currently no pressure on inventory levels. Although the potassium sulfate market performed poorly at the end of 2019, this spring the entire fertilizer market saw some pleasant surprises; potassium sulfate, in particular, performed quite well. As the industry’s operational rate remained low throughout February, it dropped below 40% in Mannheim during that period. However, this low level of operation coincided with a surge in demand, which led to rapid reduction in inventory levels. Many manufacturers’ order schedules were filled up by the middle to early part of April, with a few having orders scheduled for around the end of April. Although the market situation has gradually turned sluggish, manufacturers have only just begun to see an increase in their inventory levels, so there is no pressure for now. Secondly, the market for by-products is favorable, and they have strong resistance to pressure. It can be said that the current market situation for the by-product hydrochloric acid is the best it has been in recent years. Although the price at the high end is not as high as around 600 yuan per ton as before, the overall price remains above 0 yuan; there are very few cases where the product is even given away for free, let alone sold at a loss. As a result, the profits of the Mannheim potassium sulfate manufacturers have inadvertently increased. In the eyes of outsiders, it is only known that potassium chloride is no longer what it used to be; what they don’t realize is that hydrochloric acid is also no longer what it used to be. Therefore, although the price of potassium sulfate dropped as potassium chloride’s price fell, the pressure from buyers to reduce prices was actually relatively low. Third, the export of decent-quality tobacco is on the way, and market demand is promising. Due to the impact of the pandemic, China’s potassium sulfate exports faced initial concerns and hesitation. Currently, the situation is fairly satisfactory: the volume exported is not large, but orders continue to arrive. Although prices have dropped, they remain roughly on par with domestic levels. If this trend continues, it could serve as a significant boost for the domestic market. Although it is a relatively off-season, demand for easily available water-soluble potassium sulfate and other such products in the summer market remains promising. By holding on until June, the tobacco bidding market for another year begins to operate once again, thereby providing additional support for the potassium sulfate market. Finally, the pressure in the water-salt system is reduced, and competitive pressure is lower. Luo Potassium has entered its summer shutdown period for maintenance, and the duration of this maintenance might reach a record high of 5 months. Based on past experience, it is believed that the remaining inventory may not be sufficient to meet market demand. Additionally, the operating rate of the Qinghai factory is not high either. At present, the competitive pressure between Mannheim and potassium sulfate in the water-salt system remains relatively low. On one hand, neither party currently has an urgent need to ship products; on the other hand, during summer, the demand is mainly for 52% fully water-soluble powder. In summary, the market conditions for potassium sulfate are relatively better than those for potassium chloride, and this situation is unlikely to change in the short term. However, potassium sulfate manufacturers also need to be mindful of certain points: the operating rate in the Mannheim industry has returned to its high level of 70% seen in recent years, and new production capacity is likely to come online in the future ； Future demand, including exports, under the impact of the pandemic cannot be fully predicted based on conventional reasoning ； The overall environment in the fertilizer market is not favorable; the problems affecting potassium sulfate may extend beyond potassium chloride, and the market situation for the by-product hydrochloric acid is also unlikely to remain positive. Therefore, it is also necessary for potassium sulfate manufacturers to be prepared for potential risks. (Adu)