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Potassium chloride: Price hits four – is the market dying? Author/Source: China Fertilizer Network Date: 2021-07-09 Clicks: 76 In June, the price of 62% white potassium at ports rose rapidly within just one month, passing from 2,700 yuan per ton to over 4,000 yuan per ton; currently, some premium prices have even reached 4,200–4,300 yuan per ton. At this speed, with a bit more time we can reach Mars! However, the market conditions changed quietly: during the previous surge in prices, traders almost completely stopped providing quotes and taking orders. After July arrived, the supply of goods gradually increased, and the price gap between high-end and low-end products on the market, including potassium sulfate, widened significantly. As a result, some industry insiders began to worry: Could it be that the famous saying \"God wants to destroy a man first by making him mad\" is coming true? Firstly, it are mainly small traders who sell at low prices; large traders still claim to have limited stock and cannot offer quotes, focusing instead on serving their key customers. In recent days, in many ports, the transaction prices for 62% white potassium and 60% bright red granular potassium have been low; the price difference compared to normal quotes exceeds 100 yuan. On the one hand, prices had already risen too rapidly, with higher-end products being overpriced, so it may seem as though prices have dropped, but from another perspective, it can also be said that there has been an increase in transactions at higher prices. On the other hand, it is mainly small traders who are selling these products, and even if they intend to withdraw from this business, they do so in a calm manner without any panic. The increase in the supply of these products, along with some low prices, is mainly due to temporary profit-taking. The price has reached the 4,000 mark, and relevant authorities are paying increasing attention to the sharp rise in fertilizer prices; as a result, many traders have become satisfied, and risk-aversion is now guiding their decision-making. After all, the rise in the price of potassium chloride is ultimately due to potential shortages in future supply, an issue that has not been resolved and shows no signs of being resolved. As a result, it will be difficult for potassium chloride prices to drop significantly in the near term; therefore, large traders can remain patient, and some downstream users are still prepared to make substantial purchases at favorable prices. Moreover, the tension isn’t limited to the port market. Currently, there is a shortage of domestic potassium supply, which is caused by two main factors. First, the price of imported potassium is high and suppliers are reluctant to sell it, making the relatively cheaper domestic potassium highly sought after and thus increasing demand. Second, production and shipment in Qinghai are not stable; output in the first half of the year decreased slightly compared to the same period last year. Moreover, inventory levels were already low from last year, and changes in sales dynamics following price increases have led to higher demands from key customers. Some agents do not have enough supply to meet the needs of other markets, while others also refrain from selling their products ； There are limited imported goods available in the border trade market in June, and no import orders have been placed yet for July – half a month later than usual. It is said that foreign suppliers are demanding significant price increases and allocating the volume of orders based on price levels. Whether Russia will once again be forced to compromise as it did in May and June, or whether imports will be suspended once more, we can only wait and see what happens. Secondly, although the official quote for domestic potassium has risen, it remains very low; however, market circulation prices have quickly aligned with those of imported potassium. In July, the official price set by Yanshu Company for 60% potassium chloride supplied to agents was 2,770 yuan per ton. Although this price represents an increase of 320 yuan per ton compared to the previous quote—a fairly significant rise—it still falls far short of the cost of imported potassium. As mentioned earlier, there is currently a shortage of domestically produced potassium, so the selling prices set by agents are no longer confined to the levels around the official prices as in the past. According to market feedback, the price at the point of delivery has reached 3600–3800 yuan per ton. While imported potash experienced some fluctuations and consolidation, the rising prices of low-end domestic potash played a role in stabilizing market sentiment to a certain extent. Third, high-end prices in the international market are higher than those in the domestic market, and suppliers are also trying to raise low-end prices as well. Currently, the price of 62% white potassium at the port, converted to a lump-sum CIF price, is around $550 per ton ； The high prices in the international market are found in the Americas; the CIF price for large particles is around $600 per ton, which is generally slightly higher than the price in our country due to price differences ； In Asia, the standard landed price of potassium in the Southeast Asian market used to be around $300 per ton, thanks to the extremely low prices offered in large-scale contracts by China and India. However, recently, prices in the region have risen to over $350 per ton, and they are expected to continue climbing. India originally signed a new large contract at $247 per ton, earlier than our country, but it was renegotiated later at $280 per ton. Recently, importers in that country have issued several new procurement tenders; first, the prices increased slightly, and then those tenders had to be canceled due to a lack of bidders. Considering India’s high prices for nitrogen and phosphate fertilizers as well, I am concerned that there might be three such tenders in a year, leading to price increases similar to those seen in the Southeast Asian market. If things really develop in this way, our country’s future large-scale contracts will find themselves in a very disadvantaged position. Finally, the overall market conditions remain favorable; it would be ideal for fertilizer prices to drop in the autumn market, but stability should come first. A few days ago, urea prices dropped sharply, which even led to some compound fertilizer manufacturers delaying the introduction of their autumn-related policies; however, prices have rebounded in some areas in the past two days ； The price of ammonium phosphate was on the rise due to strong exports and tight supply, but it has temporarily stabilized for some special reasons. According to some industry insiders who are optimistic, supply is already tight, and the autumn market is about to start up; it may be difficult for prices to rise any further, but it’s not easy either for them to fall. Additionally, some manufacturers believe that at this point it is sufficient to keep prices stable and prevent them from rising unchecked, as the market is gradually starting to pick up momentum. If prices drop sharply and companies end up in trouble, that will not be beneficial for their long-term development ； Moreover, the market tends to buy when prices are rising and not when they are falling; in such cases, a sharp drop in prices can also slow down the pace of stockpiling by the market, increasing the uncertainty surrounding fertilizer use safety. Stop arguing about why nothing was said when fertilizer prices rose – such silence is detrimental to market development and the safe use of fertilizers. First, issues need to be analyzed on a case-by-case basis; second, please read the author’s previous articles. Thank you. In summary, although many people, including the author, hope for a decline in potassium chloride prices, it is unlikely that these prices will drop in the short term; in fact, there is even a possibility of further price increases in the future. However, the fluctuations around the 4,000-yuan mark this time also set the stage for a real decline in prices later on; no matter how high the prices go, once they start to fall, they could drop rapidly back to 4,000 yuan per ton or even drop below that level. In other words, it’s temporarily difficult to sell, but it will become increasingly hard as prices keep rising. Regarding the potassium chloride market in the future, there’s just one thing to say: buy when it’s time to buy, sell when it’s time to sell, and take a break when necessary! In the end, we still urge those in charge to find ways to produce more potassium chloride – this is the key to addressing the unreasonable high prices and preventing future crises. To stay informed at any time about detailed and accurate market trends and related information regarding fertilizers such as potassium fertilizer, and to understand the developments in the fertilizer market, please continue to follow China Fertilizer Network (official website: www.fert.cn, mobile app: www.fert.cn/app, or WeChat official account: fert-cn). (Adu)