Potassium sulfate: From attempts to raise prices to being forced to do so

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Potassium sulfate: From voluntary price hikes to forced price increases. Author/Source: China Fertilizer Network. Date: March 9, 2021. Page views: 3. “A Spring Journey with Little Sulfur” by A Du. Around the Lunar New Year, potassium fertilizer prices rose by a hundred or two hundred yuan per ton. Old Chlorine becomes more and more fierce, while Little Sulfur feels increasingly distressed. 　　With no inventory, confidence remains high; rising nitrogen and phosphorus levels only increase expectations. It’s sad to be trapped between two pressures; any further rise only adds to the helplessness. 　　Compared to the previous year, the mainstream price of potassium sulfate has increased by 100–150 yuan per ton; the actual transaction (intent) prices in various regions have also risen by 50–200 yuan, with increases being relatively larger in regions such as Hebei, Shandong, and Hubei. In the Sichuan and Chongqing areas, prices remain relatively stable due to factors related to the high-quality products available there. Among them, the price of potassium sulfate in the water-salt system also increased by 50-100 yuan. 　　According to data from Zhongfei Net, the current average ex-factory price in China for 50% potassium sulfate powder of the Mannheim type is around 2,750 yuan; the average ex-factory price for 50% granular form is around 2,850 yuan. The average ex-factory price for 52% fully water-soluble powder is between 2,850 and 2,900 yuan. In practice, the actual ex-factory price for this 52% fully water-soluble powder varies between 2,700 and 2,900 yuan in different regions, with some areas having slightly higher or lower prices. Generally speaking, prices are lower in the Northeast and Northwest regions, while there are not significant price differences in other areas ； Regarding potassium sulfate in the water-salt system, the recommended price for 52% powder upon arrival in Xinjiang is 2850 yuan, while the recommended price for 50% powder upon arrival in Qinghai is 2650–2750 yuan; agent sales prices remain steady or are slightly lower. (Note: All prices listed above are for factories or large traders; they are not the retail prices available to farmers.) The reasons for the increase in potassium sulfate prices are, first and foremost, the consistently low inventory levels, which means manufacturers are under no pressure. Secondly, prices have tended to rise during similar periods in the past, which leads manufacturers to be optimistic about future market conditions ； Urea prices soared before the New Year, and phosphate ammonium prices rose sharply after it; the overall fertilizer market performed well, which gave rise to an even stronger drive to turn optimistic expectations into action ； Potassium chloride prices have also risen; the sale of hydrochloric acid is currently difficult, and sulfuric acid prices have gone up as well. As a result, for some companies, failing to raise prices means incurring losses. 　　Potassium sulfate prices have risen, and there are a range of objective and subjective reasons for this. While the upward trend seems promising on the surface, actual sales performance remains average for now; most manufacturers are still focusing on fulfilling previous orders, and there has been no significant increase in their gross profit margins. Except for the manufacturers in the Northeast and Guangdong, who enjoy better profitability due to the higher selling prices of the by-product hydrochloric acid, the gross profit of manufacturers in Mannheim is mostly below 200 yuan, or even around 50 yuan only. This means that losses could occur if the raw material, potassium chloride, is not purchased properly, or if the price of hydrochloric acid drops further. 　　Apart from cost pressures, supply and demand are the fundamental factors that require long-term attention from manufacturers. Although manufacturers are not currently facing significant inventory pressures, some of them have recently reported that customers who made payments in advance are less eager to pick up their orders. Manufacturers in the Central Plains region have also noted that goods from the Northeast are making their way southward. This suggests that it would be best for potassium sulfate prices to remain strong; otherwise, given the pressure of overcapacity, extreme price fluctuations could occur. Of course, the concerns mentioned above are primarily based on long-term trends; in the short term, there’s no need to worry too much about them. The industry is not facing any inventory pressures at the moment, and the price of potassium chloride continues to rise. In the future, demand for 50% granular form and 52% fully water-soluble powder is set to increase, and the upward trend in potassium sulfate prices is likely to continue for some time yet ； If there are no extreme changes in the overall environment, it is possible for potassium sulfate prices to see another small rise due to cost pressures. 　　(Adu)