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Potassium chloride prices have risen to new highs on their own _ Author/Source: China Fertilizer Network. Date: September 14, 2020. Click-through rate: 6. Even if the exchange rate is calculated at 7, the maximum cost range for port-delivered potassium chloride under current major contracts is approximately 1,650–1,900 yuan per ton. Since the signing of these major contracts on April 30, the price range for port-delivered potassium chloride has first declined from 1,900–2,200 yuan per ton to 1,600–1,850 yuan per ton by late July and early August; it then began to rebound, and currently stands at 1,700–1,950 yuan per ton. Put it more elegantly, port potassium chloride prices have returned to their previous level and are now trying to reach new heights. The 62% potassium chloride powder from the port has always been the “most popular” potassium chloride product. Currently, its supply is relatively scarce; the premium-grade price has risen to around 1,930 yuan per ton. Despite various doubts expressed by the market, it is reported that small orders have recently been transacted at prices ranging from 1,900 to 1,920 yuan per ton. Its high-end cost is 1,850 yuan per ton, while the lowest fixed cost is only 1,700 yuan per ton ； During the worst phase earlier on, its price was only around 1,750 yuan per ton; reportedly, the minimum price offered by importers to key clients for large orders approached 1,700 yuan per ton. What time is it now? During the autumn market, winter stockpiling has not yet officially begun. Put simply, it’s just a short season; at best, it can be said that the new raw material procurement season is not far off. How is the supply? Domestic potassium production is far smaller compared to that from salt lakes; imports through border trade have returned to pre-existing levels. Stockpiles in ports remain at historically high levels, similar to those in the same period of 2019 – in fact, they are almost twice the levels seen during the corresponding periods from 2016 to 2018! The market situation for compound fertilizers doesn’t look promising either; there’s no urgency to purchase large quantities of raw materials, and supplies remain abundant. Although some specific types might be in short supply, what’s the reason for a price increase? Not only in the ports, but informal trade has yet to officially report new prices for September’s supply; rumors suggest that some importers have offered tentative prices of 1,700 yuan per ton for 62% purity powder (the previous transaction price was 1,580–1,600 yuan per ton) ； In September, Salt Lake Company raised its price by 20 yuan per ton; taking into account various preferential policies, the actual price increase was around 80 yuan per ton at most. So, on what basis? The international market situation isn’t very promising either; apart from occasional small price increases of a few dollars in Brazil, other markets remain at low levels. Based on the current production and sales data of suppliers as well as the market conditions in the upstream and downstream sectors of the importing countries, it is actually not possible to foresee any significant increase in the price of potassium chloride. So, the claim that foreign companies will not provide additional quantities for large contracts in China seems, for now, to be nothing more than their usual tactic of psychological pressure. So, what exactly is it based on? Rising prices of domestic potassium: Firstly, imported potassium at ports is driving up prices, and by a significant margin ； Secondly, the agents in the early stage always sold at cost levels in order to achieve profits ； Third, Salt Lake Company is seeing strong sales and production; reportedly, its current inventory is limited, and it is now less than 1 million tons away from meeting its annual targets ； Fourth, small factories are constrained by mineral sources and low prices, resulting in unstable production; some large factories also face such challenges. Border trade surge: Firstly, there were too many pre-orders in August, resulting in over-selling by importers to varying degrees ； Secondly, in September, foreign buyers requested a price increase of $10; negotiations led to a delay in signing the order. Although the foreign buyers did not get their way in the end, the quantity of goods supplied to the importers was reduced by about one-third ； Third, the prices of white potassium and large red particles at Bayuquan Port have risen in line with those at other ports, reaching levels of 1,850–1,930 yuan per ton ； Fourth, there has been a noticeable increase in inquiries from long-term clients recently. It can be seen that the rise in prices in the border trade and port markets is, to a certain extent, a result of the increase in the price of potassium chloride at ports. On this basis, there are indeed certain fundamental factors providing support for these price increases; however, none of them are the key determinants. As for the leading rise in port potassium chloride prices, which was the catalyst for this trend, and its continuous increase over time, the industry as a whole remains unclear about the real reasons behind it Perhaps one day in the future the mystery will be solved. For now, I believe it goes something like this: initially, there was a reduction in contract prices; an oversupply of goods and intense competition among companies drove prices down to near their minimum cost levels. This created growing pressure, making it imperative to find opportunities for a price rebound ； Then the reform of state reserves provided an opportunity; since the big players needed to organize their inventory, sales had to be suspended temporarily, and of course this situation could be taken advantage of ； The strikes in Belarus were a pleasant surprise – a sort of \"black swan\" event. Although it seems they didn’t cause much damage in reality, they still sowed seeds of panic in both domestic and international circles ； After the price increase, producers reaped the benefits; domestic potassium and potassium sourced through border trade also saw price hikes. That was the perfect opportunity to further drive up prices... In short, there are indeed some underlying factors providing support here. However, they’re not very clear-cut. Perhaps the key support for this strong rebound in potassium chloride prices is actually a combination of all these factors. It’s currently difficult to find potassium chloride at low prices, but whether the current price level is inflated or not still needs to be tested by the market. On the one hand, it is expected that the scope for fluctuations in the future will be roughly the same, and the risks cannot be ignored ； On the one hand, the sellers are firmly united, the possibility of an “unexpected” situation is taken seriously, so there is a slight increase in prices for now. Therefore, it is recommended that downstream parties purchase as needed, but they can increase their inventory levels appropriately, especially manufacturing enterprises. (Adu)