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Rising raw material costs pose challenges; Yunnan Tobacco reports stable performance. Author/Source: China Fertilizer Network Date: 2020-10-14 Clicks: 7 As the price of potassium chloride rose by around 200 yuan, the price of its by-product, hydrochloric acid, declined somewhat. As a result, the cost pressures on the Mannheim potassium sulfate plant increased significantly; any decline in prices was halted. Recently, prices have seen a rebound of 50–100 yuan per ton, though this is currently mainly observed in the lower price range. The rise in potassium chloride not only increases the cost of potassium sulfate produced in Mannheim; the partial rebound in prices at the lower end is also not something that happened under pressure. In fact, as downstream manufacturers are concerned that potassium sulfate might see price increases similar to those of potassium chloride, they have started to increase their purchases while prices are still relatively low. Indeed, sales of potassium sulfate produced in Mannheim have shown some improvement recently. Moreover, the supply of potassium sulfate in the water-salt system is already limited, and manufacturers have been actively promoting the idea that prices will rise. Under various factors, some intermediate traders have also become increasingly enthusiastic. So far, the overall market situation for potassium sulfate has not been very favorable, as it is after all a slow season for demand; yet there have been one support after another. The bidding for Yunnan tobacco has just concluded, and the bids are as follows (the bid prices are based on delivery at the designated railway station): *Section 1 (30,000 tons): Luoke 52% at 2550 per meter; Gao 52% at 2600 per meter; Qingshang 50% at 2600 per meter. *Section 2 (30,000 tons): Luoke 52% at 2550 per meter; Gao 52% at 2600 per meter; Qingshang 50% at 2600 per meter. *Section 3 (30,000 tons): Luoke 52% at 2550 per meter; Gao 52% at 2600 per meter; Qingshang 50% at 2600 per meter. *Section 4 (30,000 tons): Luoke 52% at 2550 per meter; Gao 52% at 2600 per meter; Qingshang 50% at 2590 per meter. *Section 5 (30,000 tons): Luoke 52% at 2550 per meter; Gao 52% at 2600 per meter; Qingshang 52% at 2550 per meter. *Section 6 (29,585 tons): Luoke 52% at 2550 per meter; Gao 50% at 2500 per meter; Qingshang 52% at 2560 per meter. From these bids, it can be seen that Luoke is likely to win at least 4 sections, or even all of them ； Secondly, Qingshang and Mi High School are not very enthusiastic about meeting the targets ； Third, there were very few bidders, with no manufacturers from Qinghai in sight. To be more specific: First, since the bid threshold for this tender favors suppliers from the water-salt industry, the manufacturers in Mannheim are not very interested in offering low prices; even given the currently weak market conditions, they are not willing to win the bid at a low cost. This indicates that either the pressure is not yet significant, or they still have some confidence in future market conditions ； Second, the supply of potassium sulfate in the water-salt system is indeed limited; as a result, manufacturers in Qinghai are unable to participate in the supply. Given that Luojia will receive a large share of the orders, the tighter already existing supply situation means that the more resources are allocated to tobacco-related orders, the greater the pressure on supply in the general fertilizer market ； Third, even if the Mannheim manufacturer wins one or two bids, and the winning bid prices seem much lower than market prices, the overall market conditions are not very favorable. Winning these bids will significantly reduce the sales pressure on the manufacturer, and it will also provide some support for prices in the main fertilizer market. In summary, this tender for tobacco in Yunnan will have a positive impact on the potassium sulfate market, regardless of the final outcome of the bidding process. The rising prices of potassium chloride have also played a role, as have the favorable conditions in the tobacco bidding market. While it cannot be said that the potassium sulfate market has returned to an upward trend, there is now hope that its downward trajectory will come to an end. As for whether this once valiant warrior can truly make a comeback in his later years, we’ll have to wait and see. (Adu)