Potassium chloride is missing

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Potassium chloride is missing. Author/Source: China Fertilizer Network. Date: 2021-07-30. Clicks: 4. The title consists of just five words – extremely simple – but actually implementing it is by no means easy! Since July, potassium chloride has finally shown signs of weakening, with prices experiencing a slight decline, especially in the days approaching the end of the month. Will this round of strong price increases that began at the end of July and the beginning of August last year come to an end on this first anniversary in a not-perfect but still absolutely stunning manner? Reasons for the decline: Market constraints and additional psychological pressure. In fact, after potassium chloride prices surged by over 1,000 yuan in June, breaking through the 4,000 yuan/ton mark, demand from downstream industries began to decline significantly, giving the impression that a slow season was approaching ahead of time. When choosing formulas, compound fertilizer manufacturers try to opt for those with low potassium content or even no potassium at all. Especially after the prices of such compounds kept rising and sales declined, many manufacturers stopped using conventional fertilizers altogether ； Due to poor sales, goods cannot even be sold at their cost price, and this phenomenon is quite widespread; as a result, the industry capacity utilization rate for potassium sulfate in Mannheim has now dropped below 55%, which is 20% lower than the same period last year. In this situation, although the supply of high-priced potassium chloride remains tight, its price is gradually stabilizing, with even slight declines observed in some areas. Simply put, it’s a temporary situation of supply exceeding demand. However, this is mainly evident in the high-priced imported potassium market. In July, the prices of domestically produced potassium, which were at lower levels previously, rose rapidly to catch up. Additionally, international potash prices have continued to trend upward. Therefore, although the market momentum seems somewhat sluggish, most traders remain optimistic about future prospects. Some traders anticipate that prices will resume their upward trend during downstream restocking in August; the price of white potash at ports may even reach 4,500 yuan per ton. 　　And just at this time, the **Nth meeting arrived unexpectedly. Immediately thereafter, various rumors (intentional or not) regarding the release of state-held reserves and calls for self-discipline among large enterprises began to surface in large numbers. This caused traders who were having difficulty selling their goods and no longer had much stock left – and whose costs were relatively low – to become anxious. Even if they weren’t anxious, they felt it was unnecessary to keep waiting any longer; as a result, the situation of stability prevailing overall with only slight declines began to evolve into a trend of further declines. At this time, most of the large traders remained patient, believing that the supply of goods was still relatively tight, so they could sell them, but they were not in a hurry to do so at low prices. However, new rumors suggest that the manufacturers are about to release goods at low prices. Although the exact prices are not yet clear, it is said that these goods will be sold only to factory customers directly. This further increases the concerns of traders whose confidence is already low, and hesitation among end-users grows even more. Thus, the topic of discussion in the market shifted from whether it would fall to how much it would fall. 　　It doesn’t matter how credible the rumors are; what’s important is that the market was already facing certain constraints. At such a time, the increased psychological pressure acts as the final straw that pushes those traders with extremely high profits to seize the opportunity to realize their profits before it’s too late. This not only increased the supply available in the market for a while, ensuring supply during the autumn season, but also led to a decline in the high prices, thereby curbing further price increases. Expectations regarding time and price: One month isn’t too short, and 500 isn’t too much. Due to the temporary oversupply, changes can only occur once supply becomes tight or there is a clear demand surge; this will likely not happen until mid-August at the earliest. Prices are already starting to drop, and the tendency to buy when prices are rising rather than falling may also lead to an extended period of waiting. Therefore, it is expected that this decline will last for at least about a month. 　　Taking into account the current mainstream prices at which potassium sulfate is actually sold, the prices of nitrogen, phosphorus, and potassium as individual nutrients, future large-scale contract expectations, as well as the current market conditions in terms of supply and demand and profits, and using the price of 62% pure potassium at ports as a benchmark, it is estimated that the decline in the price of potassium chloride during this period could range from 200 to 500 yuan per ton. Future recommendations: In the short term, focus on attitudes; in the long term, consider international factors. The predictions above are only for the short term, specifically within the autumn market, and take certain non-market factors into account ； As for the long-term trend, it mainly depends on international factors to assess the situation regarding new large-scale contracts. Specific details will not be discussed in depth in this article. In conclusion, from a macro perspective, there is a need and possibility for prices of expensive fertilizers to decline; from a micro perspective, there is still room for negotiation regarding large-scale contracts for potassium chloride. Therefore, even though the issue of limited supply of potassium chloride has not been fundamentally resolved and there is a possibility of a price rebound, it is unlikely that significant price fluctuations will occur again. Furthermore, it’s not that state reserves cannot be released; rather, it’s important to consider when and how to do so. What is most desired is to see more efforts made in order to negotiate new large-scale contracts. 　　(Adu)