Thread Content
Potassium chloride breaks new records; who can understand the pain associated with potassium sulfate? Author/Source: China Fertilizer Network Date: 2020-11-06 Clicks: 22 At the beginning of this week, the premium price for 62% potassium chloride in ports reached 2150 yuan per ton. Thinking back to the astonishing forecast of 2100 yuan at the start of this price increase three months ago, can this be considered a breakthrough? According to data from Zhongfei Network, the current mainstream price range for 62% potassium sulfate at ports is between 2100 and 2150 yuan, with actual transactions still mostly occurring at lower prices. Whether it’s high-end or low-end, and regardless of the acceptance level among end-users, shippers generally control the volume of orders they take on. At first glance, this price change doesn’t seem significant; after all, it has been half a month since the product was launched at 2100 yuan. However, it is worth noting that the prices of 62% white crystal, 60% red powder, and 60% bright red particles, which previously saw relatively small price increases, have now seen substantial rises as well. Potassium chloride, which allows for greater freedom in use, has placed significant pressure on manufacturers of potassium sulfate in Mannheim. Based on the latest prices of potassium chloride and other raw materials, the gross profit margin for manufacturers in most areas has dropped below 100 yuan, with a few exceptions. If it weren’t for the favorable market conditions for by-products such as hydrochloric acid recently, things might not be as simple for potassium sulfate manufacturers anymore. In fact, the fundamental pressure on the potassium sulfate market does not stem from potassium chloride, but rather from demand: firstly, due to the pandemic, demand for crops used in economic activities was suppressed, at least during the first half of the market cycle. Recently, the prices of potassium nitrate and potassium dihydrogen phosphate have followed a similar pattern to those of potassium sulfate – costs are rising while it is difficult for these products to see price increases, leaving their room for operation increasingly limited ； Secondly, the market is already in a slow season, yet the operating rate of potassium sulfate manufacturers in Mannheim remains high. With an ample supply, the balance of power leans in favor of buyers; if there weren’t limited supplies in the water and salt sector, exports could help absorb some of the excess supply, but as it stands, there is already an overabundance of potassium sulfate ； The market for third-type compound fertilizers is poor at the moment; raw material prices have surged sharply. It is difficult to set prices for winter stockpiling of such fertilizers, and production resumption is slow. There is a shortage of funds, and it’s not clear what to do, so purchases of raw materials are being made cautiously. Furthermore, the continued expansion of production capacity will also pose more challenges to the potassium sulfate market in the future, but this topic will not be discussed in detail for now. Despite the considerable pressure, potassium sulfate is striving to turn that pressure into motivation and has not given up in its struggle. It is understood that recently, potassium sulfate prices have generally risen slightly across various regions; this increase is currently reflected mainly in higher transaction prices for lower-quality products, with the increase usually not exceeding 50 yuan. Firstly, the demand for potassium sulfate is not expected to be strong. However, even during the period when market conditions have weakened, up to now manufacturers have not faced significant inventory pressures, and this is despite maintaining high production levels. This indicates that demand is only weak, and the situation is not as serious as feared. Moreover, should market pressures continue to increase, potassium sulfate producers can reduce their production levels to sustain the market for a longer period of time. Secondly, the shortage of potassium sulfate supply in the water-salt system is unlikely to change in the short term. Luoyang Potash has already completed its annual production target, and it still needs to supply a large amount of potassium sulfate to meet the orders from Yunnan’s tobacco industry; as a result, there is considerable supply pressure. Meanwhile, the production rates of manufacturers in Qinghai have remained abnormal, and the only two companies that are still in operation are mainly focused on returning goods rather than producing new products. The tight supply and rising prices of water and salts have, to some extent, helped stabilize the weak performance of potash sulfate in Mannheim. Thirdly, at present the prices of all raw materials used in fertilizer production are rising across the board. Downstream manufacturers are showing increasing interest in fertilizers whose prices have not increased much so far. The price of potassium sulfate has fluctuated several times recently, and this time it seems to be on the verge of rebounding. The main factor behind this is certainly not the rise in the price of potassium chloride, but rather the purchase of compound fertilizers at low prices. Therefore, it may be difficult for potassium sulfate to replicate the strong market performance seen in the first half of the year, but it is still possible to maintain profitability and a high operating rate, with modest price increases driven by factors such as costs. (Adu)