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Will imports decrease or increase, and will exports go up or down? Will prices rise? Author/Source: China Fertilizer Network Date: 10-28-2020 Clicks: 5. Only two months remain in 2020 – what will be the trend in fertilizer prices? Can the upward trend across the board continue? Today, based on the import and export figures for the first three quarters, I would like to share some insights on the potash fertilizer market. Has the import of potassium chloride decreased significantly? From January to September, China’s total imports of potassium chloride amounted to 6.73 million tons, which is nearly 1 million tons less than the 7.7 million tons imported during the same period last year, representing a decline of 12.6%. At first glance: Damn! Why has the import of potassium chloride decreased so much? No wonder it’s risen so sharply lately! What’s the actual situation? In the first half of the year, the total import volume of potassium chloride was 3.86 million tons, a decrease of 30% on a year-on-year basis. However, in the third quarter alone, the total export volume was 2.87 million tons, representing a 26% increase compared to the previous year. Moreover, the import volume in the third quarter of this year actually reached the highest level ever recorded for the same period! What’s going on here? The decline in imports in the first half of the year was due to the fact that China did not sign any major import contracts in 2019; it was not until April 30 of this year that the major contracts for 2020 were signed. Therefore, such a decrease was quite normal, especially during the first half of the year ； Once the new large-scale contract was finalized, import volumes recovered rapidly, which led to that new historical record (though of course, this was not the only reason). A careful friend might ask: What does all this prove? Imports have increased, but that doesn’t necessarily mean they will keep rising, or even exceed last year’s levels Indeed, that long section of data above proves nothing; it is merely meant to serve as a starting point for further discussion. According to the information revealed in the Sino-Canadian contract, the normal deadline for the large-scale potassium chloride contract for the year 2020 is at the end of October, that is, very soon. Earlier, there were widespread rumors that Canadians said they would not provide additional contract shipments to China. Assuming that’s the case, and assuming the same holds true for Russia, Belarus, Israel, Jordan, and so on, imports of potassium chloride will definitely decline significantly in the future. But even so, is it really that scary? Firstly, the total import volume in the first three quarters was 6.73 million tons. Although this figure is lower than that of the same period last year, according to statistics from Zhongfei Net, the average annual import volume of potassium chloride since 2000 has also been only 6.8 million tons. Is 6.73 million tons considered low? Looking at the entire history of imports, there have been only 10 years in which the figure exceeded 6.73 million tons, and clearly only 5 years in which it exceeded this level significantly. So is it low? Besides, don’t forget there’s still a fourth quarter! Secondly, data from Zhongfei Net shows that the current regular port inventory of potassium chloride is 2.98 million tons, with an additional 400,000 tons in bonded ports (the destination of this stock is not yet determined; only a small portion is expected to be re-exported for now). Although this figure is lower than that of the same period last year, it is still far higher than any other year in history. Finally, since China’s imports are actually quite substantial and there is still so much stock in Hong Kong, this shows that we have strong bargaining power when it comes to signing large contracts. Moreover, with the COVID-19 pandemic still raging around the world, China is the only place that seems to be safe from its effects. Additionally, the international potassium chloride market isn’t showing any signs of a sharp rise in prices. So, although foreigners might try to challenge us, they won’t really be able to go to war with us. The volume of potassium chloride imports is not small; therefore, it is incorrect to claim that imports of potassium chloride have dropped significantly and prices have risen sharply ； Saying that imports of potassium chloride have dropped significantly, that there may be shortages in the future and that prices will continue to rise is somewhat far-fetched. The conclusion might be correct, but the reasons given are too simplistic. It says imports are high, and it also says they might keep rising – isn’t that contradictory? What is the reason exactly? As mentioned at the beginning, today we will only discuss imports and exports; nothing else. If you want to know more detailed insights, becoming a member of Zhongfei Network might be a good option. Is the export of potassium sulfate significant? From January to September, China’s total exports of potassium sulfate amounted to 291,000 tons, an increase of 12,000 tons compared with 279,000 tons in the same period last year, representing a growth rate of around 4%. Given the current market situation, it’s almost certain that the total annual exports will exceed last year’s level of 326,000 tons! So, is the export of potassium sulfate considered high? It can only be said that things remained stable, with no major achievements. It’s absolutely impossible to do without those over 300,000 tons of exports; the current price of potassium sulfate would definitely be even lower ； But with just such a small volume of exports, it’s hard to make much of a difference. According to statistics from Zhongfei Net, the current effective production capacity of potassium sulfate in China is nearly 7 million tons, with at least another 1 million tons in the process of construction or planned for future development. Meanwhile, domestic consumption amounts to around 4 million tons. So, is over 300,000 tons a lot? It is also understood that competition in the international potassium sulfate market is becoming increasingly fierce; recently, supply sources offering lower prices have entered the market to capture market share, and new production capacity will be brought online in the future. So exporting potassium sulfate is one option, but there is still a long way to go. For potassium sulfate, exports can only serve as a form of protection or insurance; so it’s sufficient to be happy if one is able to export it. It’s very difficult to use exports as a means to drive up prices! (Adu)