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Big Fat Little Dreams: Second-generation rich or second-generation poor? Author/Source: China Fertilizer Network Date: 2020-06-16 Clicks: 7 The current situation of the three major basic fertilizers – nitrogen, phosphorus, and potassium – varies. As one of the three major types of fertilizers, potassium fertilizer has only one small goal: to reach rock bottom as soon as possible and stabilize there. Rebound? Let’s finish the smaller goals first… Potassium chloride is considered a \"second-generation\" fertilizer. Customs data show that from January to May 2020, China imported a total of 4.159 million tons of various fertilizers, a decrease of 1.63 million tons compared to the previous year, representing a decline of 28.2%. The main types of fertilizers imported into our country are potassium chloride and compound fertilizers, with potassium chloride accounting for the largest share among them. Currently, the detailed data are only up to April; the total import volume of potassium chloride from January to April was 2.8 million tons, a decrease of 1.13 million tons compared to the previous year, representing a decline of 29%. At first glance, why has the import of potassium chloride dropped so sharply? Could there be a deficiency in potassium chloride? Will it soar? It’s not that the reduction was too drastic; it’s just that too many were purchased during the same period in 2019. During the first decade from 2010 to 2019, the total import volume in the first four months ranged from 1.61 million to 3.93 million tons, with an average of around 2.74 million tons; the figure exceeded 2.8 million tons only in the past three years. According to statistics from Zhongfei Net, the current stock of potassium chloride in ports is around 3.4 million tons (with a small amount still in bonded status awaiting clearance), a figure that is far higher than that in any previous year at the same time. When comparing the port stock figures for various months over the years, it also represents an extremely high level. Most of the time, the stock levels in Hong Kong during the same period were below 2 million tons; only last year they were around 2.9 million tons. So it’s absolutely true that potassium chloride is currently in a position of advantage. The comparison of historical data is merely for reference; what really matters is the import volume in later periods. In the first 4 months, a considerable volume of shipments was maintained even though large contracts were delayed for a long time before finally being signed; now that those contracts have been signed, how much lower can the subsequent shipment volumes be? Recently, Brazil has indeed been very strong, and India is doing well for now as well; but at the same time, the pandemic figures in these two countries are also quite high (I’m sorry, I can’t find the right word – it’s not meant in a negative way). If China is the only one among the top three potassium chloride importers in the world to remain strong, where will suppliers find sources for their supply in the future? It seems that the label of being a “second-generation” potassium chloride producer is one that won’t be easy to shed. Potassium chloride doesn’t want to become a \"second-generation loser.\" But setting supply issues aside and looking solely at prices, the current price of potassium chloride has dropped to near the lowest cost level after discounts, meaning it is already on the verge of incurring losses. Potassium chloride importers who do not want to become the \"second generation of losers\" strive to sell more products while at the same time sticking firmly to their cost limits. Centered on white potassium, buyers and sellers are engaged in a positional battle, to see who can pull the other side to the cost level. At present, the price of white potassium at ports is at the cost level; the price of low-grade red powder has already fallen below the cost level. The price of large-red granular potassium has just started to decline from its high level and is also getting closer to the cost level. In fact, importers who are part of the \"rich second generation\" don’t have many advantages at their disposal, but there is one factor that is particularly crucial: the current price of potassium chloride is at its lowest level in over a decade; if it drops any further, it will be back to levels seen in the last century. So the importers still have a certain degree of confidence; they are nervous, but not completely at a loss ； More importantly, many people in the downstream sector will become eager to act. On one hand, they don’t have much inventory; they may appear aggressive when trying to push down prices, but deep down they are somewhat anxious, fearing that prices might rise at any moment or that they won’t be able to obtain goods at low prices ； On the one hand, prices are already this low – how much worse could they get? What if they rise? Hehehe… According to Zhongfei Net, recent trading volume of potassium chloride has increased; the rate at which stock levels in ports are declining has accelerated significantly, and the volume of domestically produced potassium chloride being shipped out has also increased. It can basically be said that the price of potassium chloride has temporarily reached its bottom and stabilized. A rebound might occur, but it’s likely difficult for the market to recover from this point on. Da Fei Xiao Meng will first reach its bottom, and then September and October will bring further growth – perhaps we can have some hope for that for now? (Adu)