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As nitrogen and phosphorus prices rise, potassium fertilizers become more popular; should chemical fertilizers be stored for winter use? Author/Source: China Fertilizer Network Date: 2020-11-05 Clicks: 4 It’s fine when it’s not mentioned, but once it is discussed, interest increases again! In the author’s previous article titled “If Nitrogen, Phosphorus, and Potassium Prices Don’t Rise, Compound Fertilizers Will Be in Trouble,” prices of nitrogen, phosphorus, potassium, and compound fertilizers were compared with those of the same period last year. Specifically, the price of urea increased by 100 yuan per ton, while the price of phosphate ammonium rose by 50–100 yuan per ton. On the other hand, the price of potassium fertilizers dropped by 200 yuan per ton, and the price of compound fertilizers also decreased by 100–200 yuan per ton. When compared with the highest prices recorded in the past two years, although the prices of urea and phosphate ammonium have risen, they are still about 300 yuan below those peak levels; compound fertilizers are also about 300 yuan below those peaks, while potassium fertilizers are 500 yuan below them. Thus, in these past two days, it was reported that the factory price of 55% ammonium phosphate in Hubei has risen to 2,000 yuan, while the factory price of 64% diammonium phosphate at a major factory in the southwest has increased by another 50 yuan ； As a result, some compound fertilizer manufacturers hold meeting after meeting, yet they dare not announce the prices they have painstakingly determined, fearing losses if they accept orders ； As a result, another wave of suspensions in sales of potassium chloride at ports ahead of price increases has occurred; quotes for border trade have been completely halted, and the phenomenon of domestic potassium agents offering prices that are lower than the market rate has also vanished entirely. Of course, the idea that it’s better not to talk about it only makes things more interesting once it’s mentioned; this is purely a fictional story, and any similarities are purely coincidental. I am just a humble potassium fertilizer analyst; let’s talk more about potassium chloride. The current rise in the price of potassium chloride began around the end of July and early August. At its lowest point, the price of 62% pure potassium chloride at ports was 1700–1750 yuan, while the price for 62% pure potassium chloride in border trade was 1500–1550 yuan; the arrival price of 60% potassium chloride from salt lakes was also 1700–1750 yuan. Currently, the price of white potassium at ports is 2050–2100 yuan; for border trade white potassium (indicative price), it is 1750–1800 yuan. The price of 60% potassium from salt lakes upon arrival at the destination is around 1950–1970 yuan, representing an average increase of about 300 yuan. In fact, sales performance has not been particularly good during these three months of rising potassium chloride prices. Yet, with imported potassium supplies being abundant while domestic supplies are limited, and with sellers facing cost pressures but no sales pressure, and given relatively low prices both in terms of horizontal and vertical comparisons, as well as a stable international market with only occasional price increases, they still managed to raise prices step by step, in an orderly manner, with determination and without restraint, until they reached the current level. When prices rose to low levels, those who bought goods regretted not purchasing more, while those who didn’t buy them regretted it even more. As prices continued to rise, there were internal doubts among sellers, leading to a silence as they decided to suspend sales in anticipation of further price increases. Meanwhile, the prices of nitrogen and phosphorus also soared, meaning they were no longer fighting on their own. At the beginning of the price increase, there were rumors in the market that the price of potassium chloride at ports would rise above 2,000 yuan, and that the price of 62% powder would reach 2,100 yuan. Now those targets have been achieved; some are even suggesting a price of 2,200 yuan. Yet sales remain suspended. Is this approach intended to maintain stability by achieving high prices, or is it meant to use 2,100 yuan as a target and continue to see prices rise further? The supply of potassium chloride is sometimes tight and sometimes not – it’s tight when it isn’t supposed to be, and not tight when it should be. Did those words confuse you? It’s not really a situation of shortage; what happens is that sellers are reluctant to sell and demand higher prices, often citing reasons such as limited supply or scarce inventory. But in reality, the total stock in ports currently stands at over 3 million tons, which is at a historical high and far exceeds levels seen in the same periods in previous years ； There is tension even in the absence of it; the reason is that although there are large inventory levels in Hong Kong, the existing large contracts are coming to an end, and negotiations for new contracts are likely to be difficult. On the other hand, the inventory of potash from salt lakes is at a historical low, and there are indications that production might decrease in the future. With little likelihood of significant changes in demand, potassium chloride prices have been on the rise during periods when supply was not tight; once supply starts to decrease, it is unlikely that prices will drop significantly at least. If the reduction in supply is severe, it is not impossible for prices to rise further as well. (I wonder if the big shots let out a sigh of relief once October 31st passed?) Hehe…) Historical experience tells us that if prices of fertilizers rise too sharply during the winter storage period, there is a significant risk of a sharp drop in prices in the first or second quarter of the following year, and this cannot be ignored. However, potassium chloride differs from nitrogen and phosphorus in that, on the one hand, its price is relatively low, and the price per unit of nutrient content is also the lowest; on the other hand, potassium chloride is mainly imported, while nitrogen and phosphorus are exported in net terms. In terms of supply security, potassium chloride has a lower level of reliability, which makes winter storage of potassium chloride more feasible. With such expectations, purchases of potassium chloride need to be made decisively; as long as factors such as price increases, supply security, and one’s own production and sales schedule are properly coordinated and planned, it is possible to determine the appropriate quantity for each purchase. (Adu)