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Potassium chloride rises again?? Price surge! Powdery mildew? Author/Source: China Fertilizer Network Date: 2020-09-15 Clicks: 8 During regular work hours, my colleagues, especially those new ones with whom I have become somewhat familiar, often say to me: Brother Du, your way of talking on the phone is really scary; you just say things like, ‘How much is white powder?’ ’What, it’s still all ‘ton price’. As for the current market situation for potassium chloride, especially for the 62% powder variety at ports, it really gives the impression of being of poor quality. (*Statement: The author may not know what that smell is like, but it’s been reported in the news on TV; it’s basically a very strong stimulant. ***Cherish life and stay away from drugs! It is understood that currently, the premium price for 62% white potassium offered by major port traders is 1,950 yuan per ton; this applies mainly to potassium chloride enriched with white powder at ports in East China and other areas. The prices for 62% Russian white potassium chloride and 60% pure white potassium chloride range between 1,900 and 1,920 yuan per ton. Meanwhile, the lower end price for 62% white crystal potassium chloride remains around 1,860 yuan per ton. The price gap between the high-end and low-end products is significant. Although there are not many transactions at the higher prices, on the one hand, large-scale traders control the number of orders they accept; on the other hand, as the prices of high-end products continue to rise, the prices of low-end products are also gradually increasing. The new prices in the border trade markets remain unclear, with delays occurring over and over again; such delays clearly demonstrate the calmness of the importers. It is understood that due to the heavy overselling in August and the failure of prices to rise as expected by foreign buyers, supply was reduced in September; as a result, importers are no longer in a hurry. It is said that the intended price for 62% white potassium has reached 1,700 yuan per ton. Driven by the import of potassium chloride, the price of domestic potassium is also gradually rising. Following the price increase in September, the current quoted price for 60% potassium from its agents in Yanshu has risen to 1,900 yuan per ton at the delivery point. Although small-scale manufacturers of 57% potassium are still primarily fulfilling earlier orders at lower prices, given the overall upward market trend and limited availability of raw materials, their ex-factory prices have gradually climbed to around 1,350 yuan per ton, with them awaiting new orders. Since the rebound until now, the entire market has been filled with doubts, yet potassium chloride prices have still risen: Has it reached rock bottom? Rising! You doubt it? Rising! Still waiting to see? Rising! Can’t sell it? Rising! Did the potassium sulfate fall off? Rising! Not possible internationally? Rising! What did you say? Rising! Although the author tried to find reasons for the price increase, advised those in the downstream sector to compromise to some extent, and even predicted that high prices in the future could exceed 2,000 yuan per ton, I was still shocked when the price of 62% potassium chloride at the ports rose so quickly to 1,950 yuan per ton. 2,000 yuan per ton – could it be any higher? Is it the top? In fact, from the time of the rebound to now, the price of potassium chloride at ports has only increased by 100–150 yuan per ton over a period of just over a month, whereas in the previous three months its price had dropped by more than 300 yuan. It’s all around 100 yuan per month; although the reasons given lack some practical basis, it doesn’t seem like there’s anything unacceptable about it. Under the current price, the gross profit is only around 50 yuan per ton, which is not much either. Moreover, in terms of the price per nutrient, potassium costs around 32 yuan per ton, which is still lower than that of other major compound fertilizer ingredients such as urea and monoammonium phosphate. Furthermore, in recent years, there is a high likelihood of potassium chloride prices rising in the fourth quarter. Although prices sometimes rise in the fourth quarter and fall in the first quarter, overall they tend to remain higher after a decline, by around 100 to 200 units. Although this rebound came a bit early, potassium chloride is still rising on its own, amid doubts and cautious attitudes ； Although it’s likely that some of the potential for future increases has already been used up, waiting around doesn’t necessarily mean that things will return to how they were before ； Although the inventory at the port, at around 3.6 million tons, is twice that of the same period in previous years, will there really be problems with supply? For those on the downstream side, they have already lost over 100 yuan; continuing to lose might cost them at least another 100 yuan ； If you win, apart from saving a few dozen yuan, you might only get your original 100 yuan back. The chance of winning more isn’t zero, but it’s not high. Therefore, the rise in potassium chloride prices cannot really be described as crazy; it simply reflects the strong control that sellers have over the market. The confidence behind Damao’s continuous price increases stems from the fact that prices had essentially reached their bottom level earlier on (due to the costs associated with large-scale contracts), and such prices are considered low even when viewed in the context of domestic and international historical trends ； Based on historical experience, there is a high likelihood of growth in the fourth quarter; even though the situation in the first quarter of next year is uncertain, the cost of losing this bet is low while the rewards for winning it are substantial ； Just a few months after the large contracts were signed initially, there was a large supply of goods held in bonded storage for sale, numerous import channels existed, and competition was fierce. Now, the volume of shipments has become more stable, and the sources of supply have become more concentrated ； The pandemic has led to greater emphasis on food security; overall, food prices have risen. The overall environment in the fertilizer market is favorable rather than unfavorable, and concerns regarding supply security on a long-term supply and demand basis have intensified. Upon closer consideration, it turns out that the rise in the price of potassium chloride is another clever scheme, one that has already been half-successful; whatever the downstream parties decide to do, at least for the winter storage period, the sellers are in a position of strength. The remaining half mainly depends on whether circumstances on the supply side are favorable, so that those who enter the market later can also be satisfied. (Adu)