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Potash prices skyrocketing? A black swan is flying over! Author/Source: China Fertilizer Network Date: 2020-08-18 Clicks: 3 Over the past half month or so, the price of potassium chloride has seen a rebound. Initially, some importers of potassium were reluctant to sell and held their prices high; subsequently, the prices quoted for potassium from salt mines increased by 10 yuan in August. Soon after, ports in East China also saw a rise in potassium prices. As of now, the price of 62% pure potassium at these ports has increased by at least 30 yuan per ton compared to before. Just as everyone was still debating whether this rebound would mark the beginning of a price hike for potassium chloride, a little black swan flapped its wings and flew over from the side. Is it state reserve? Wrong! No! Since the release of the **Regulations on the Management of Commercial Reserves of Fertilizers** at the end of July, \"national reserves\" has become a new buzzword in the fertilizer market. Many in the industry have high hopes for it, believing that it will turn things around and make fertilizers once again in demand! To this day, it’s still common to see people sharing this on social media... In reality, this is merely an upgraded version of the “Measures for the Management of Commercial Reserves During Off-Seasons for Fertilizers” from 2005; it’s not some completely new concept at all. The purpose of these off-season reserves is to ensure a stable supply of fertilizers. So why has it been regarded as some kind of “lifesaving” measure? The new regulations are positive in nature – more comprehensive, unified, and transparent than before – but it doesn’t mean that 10 million tons of reserves will appear out of nowhere; responsibility for profits and losses still remains as it was. So, why be excited? Study carefully the amount of inventory held in each year throughout history, and find out more about the actual situation of the companies that are responsible for storing this inventory. I’m being kind, so I won’t criticize you any further. As for those 1.5 million tons of potash fertilizer held in the national reserve, the situation is largely similar to what was described above. The only difference is that it has been allocated to multiple entities, allowing more eligible parties to participate in the bidding process. Take a look at those conditions, find out who submitted bids, and your heart, which has been pounding again, can return to peace. The black swan mentioned this time came from abroad. We have been worried about the impact of the pandemic, or a decline in demand from downstream sectors, or disruptions in production and logistics upstream. Yet before such outcomes could occur, an unexpected \"black swan\" event happened: Belarusian potash plants announced that they would go on strike starting from the 17th. Here’s roughly how the events unfolded: in the Belarusian presidential election, Lukashenko achieved another overwhelming victory* ； The public believes it is fraud, so they protest and demand a re-election ； People died in the clashes; Belarusian authorities **arrested thousands, as protests escalated ； The news of a nationwide strike spread rapidly, and many large companies have announced strikes; the Belarusian Potash Plant has declared that it will begin striking starting from the 17th. According to reports from the Russian news agency Sputnik in Moscow, Belta cited Belarusian President Lukashenko as saying that strikes in his country would benefit Russia, Canada, the United States, and Germany. How could it not be beneficial? Based on data from 2019, Belarus’s potash production was around 7 million tons (in terms of pure content) ； Unless otherwise specified, the figure refers to physical quantity), ranking second in the world ； China imported 1.87 million tons of potassium chloride from Belarus, second only to Canada and Russia ； On April 30 of this year, our country took the lead in signing a new large-scale contract for potash fertilizer with Belarus; the CIF price of $220 once again made it a region with low potash fertilizer prices worldwide. However, customs data show that by the end of June, at the end of the first half of the year, our country had imported only 340,000 tons of potassium chloride from Belarus. What do you conclude from this status and these data comparisons? This rebound in potassium chloride prices was not influenced by the previous news of strikes in Belarus. Its rebound was driven mainly by long-term cost pressures, coupled with concerns over future supply (long-term worries stemming from the impact of the pandemic, as well as rumors that companies such as Kali would refuse to order additional quantities after completing their large contracts and would instead seek to renegotiate them). Additionally, the sharp rise in urea prices earlier played a minor role in this rebound. This time, the concerns are undoubtedly growing; if the strike at Belarusian potash plants lasts for a long time, then international and domestic prices of potassium chloride will see how much they can rise! Of course, in such an economic climate, securing food is a major problem. Lu’s 26-year presidency wasn’t in vain either; experience tells us that issues such as mine collapses and worker strikes often arise in the potassium fertilizer supply chain, but it manages to get through those challenges safely each time ； We must also not forget that recently, the international potash market has been sluggish, and our inventory levels at ports remain relatively high. Renegotiating poses no fear to us at all. So, keep an eye on it – maybe this black swan with its wings angled to the side will flutter away again?