China's Potassium Salt Industry Runs into Trouble      

By Li Gang, Qi Shaoying, China Inorganic Salt Industry Association (CISIA) Potassium Salt Branch   

The price of domestic potassium chloride has dropped from a peak of RMB5 000 per ton in 2008 to around RMB2 800 per ton in September 2009, with the overall operating rate of potassium sulfate manufacturers using the Mannheim process less than 20%. Due to a high export tariff and slack demand in the domestic market, some small-scale enterprises have ceased their production of agricultural grade and industrial grade potassium nitrate while many medium and large size companies are struggling on the edge of losses. Meanwhile, the production of more than 140 potassium salt products, including potassium carbonate, potassium hydroxide, potassium dihydrogen phosphate and potassium permanganate, is running at low rates, because the continually falling price of their raw material potassium chloride cannot support their product price. Farmers have been unwilling to use potash fertilizers since the beginning of 2008. Overall, China's potassium salt industry is suffering an ordeal of multiple pressures.   

I. Potassium Salt Resources     

In China, the main potassium salt products purified from natural potassium salt mineral deposits are potassium chloride, potassium sulfate, potassium and magnesium sulfate. From January to June 2009, the total mineral-based yield of those four products was about 2.0 million tons equivalent to potassium chloride, or 1.252 million tons equivalent to potassium oxide (K2O), up 16% year-on-year.  

1. Potassium chloride    
In China, there are 31 chief potassium chloride manufacturers, among which 18 are located in the Qarhan Salt Lake region. In 2008, China's total production capacity of potassium chloride is about 3.9 million tons with an annual yield of 4.28 million tons. In the first half of 2009, the output of potassium chloride was about 1.759 million tons (or 1.099 million tons of potassium oxide), up 15.3% year-on-year.  

2. Potassium sulfate   
The chief manufacturers in China that make potassium sulfate from salt lakes with high potassium sulfate content include SDIC Xinjiang Luobupo Potash Co., Ltd., Qinghai Lenghu Bindi Potash Fertilizer Salt Co., Ltd., and Potash Plant of Shandong Haihua Company Limited. Currently, domestic production capacity of potassium sulfate from salt lakes is 1.32 million tons annually. But in the first half of 2009, the production yield was only 230 000 tons. Sales conditions were not good, and the price has kept following the price fluctuation of potassium chlorate.  

3. Potassium and magnesium sulfate    
There are seven chief potassium and magnesium sulfate manufacturers in China:
    * Qinghai CITIC Guoan Science and Technology Co., Ltd.
    * Qinghai Bindi Potash Fertilizer Co., Ltd.
    * SDIC Xinjiang Luobupo Potash Co., Ltd.
    * Qinghai High-end Salt Lake Technology Co., Ltd.
    * Xinjiang Yaret Chemical Industry Co., Ltd.
    * Germu Xinke Potash Fertilizer Co., Ltd.
    * Potash Plant of Shandong Haihua Company Limited
    Their combined production capacity is 1.425 million tons annually. Yet in the first half of 2009, China's domestic production yield of potassium and magnesium sulfate amounted to only 165 000 tons.  

II. Deep processed potassium salt products   

China produces more than 100 deep processed potassium salt products from potassium chloride and potassium sulfate minerals, among which Mannheim processed potassium sulfate, potassium nitrate, potassium carbonate, potassium hydroxide, potassium dihydrogen phosphate, potassium, permanganate and other types of potash fertilizers are in large scale production. The production capacity of Mannheim processed potassium sulfate is about 2.9 million tons annually. However, due to the wild price fluctuation of potassium chloride and sulfuric acid raw materials, and the extreme decline of market demands, the production yield plummeted to a little more than 200 000 tons in the first half of 2009.  
   There are nearly 20 potassium nitrate manufacturers in China, with a combined production capacity of 350 000 tons annually. Due to the decline in demand for agricultural-grade potassium nitrate, the sharp consumption drop of potassium nitrate in kinescope glass shell segments and the increase of special export tariff, the domestic potassium nitrate market is in a slump. In the first half of 2009, the output was only about 150 000 tons, and the price has dropped from RMB7 600 per metric ton in early 2009 to RMB4 000 - 4 600 per ton in August and September 2009.   
   There are 12 potassium carbonate manufacturers in China, with a combined annual production capacity of a quarter million tons or so. China-made potassium carbonate is mainly used to produce glass shell of kinescopes or for export. Since the kinescope glass shell segment suffered a huge blow in the first six months of 2009, the demand for potassium carbonate was severely reduced, and in turn domestic production of potassium carbonate dropped dramatically. In 2008, the yield of potassium carbonate was 150 000 tons for the year, but in the first half of 2009 only 50 000 tons was produced.  
   China has 13 potassium hydroxide manufacturers, with annual production capacity of 300 000 tons, which is mainly produced by ion-exchange membrane process. Its output was 200 000 tons in 2008 and 120 000 tons in the first two quarters of 2009, with little year-on-year change.  
   There are 20 or so potassium bihydrogen phosphate manufacturers in China with a combined annual total capacity of 200 000 - 300 000 tons. The output in first half of 2009 was about 70 000 tons.  
   There are 17 potassium permanganate manufacturers in China with a combined annual production capacity of 50 000 tons, accounting for 53.3% of world's total production capacity. In 2008, the production yield of potassium permanganate was about 30 000 tons and the output in the first half of 2009 was around 15 000 tons.
   China's production capacity of potassium chlorate is about 100 000 tons annually, divided among 12 manufacturers. Altogether they export 30% of world's total export volume. In 2008, the production yield was about 70 000 tons. The output in first half of 2009 was 30 000 tons.  
   China's annual production capacity of potassium perchlorate is about 40 000 tons with a production yield about 30 000 tons. There are 12 chief manufacturers.  
   All in all, China's deep processed potassium salt production now needs about 1 million tons of potassium chlorate annually (10 percent of the nation's total demand). Potash fertilizer production consumes 85% of that.

III. Existing problems    

1. Low utilization of potash fertilizers   
Currently, the utilization of potash fertilizers in China is far below the country's need to increase crop yield and value. Internationally, the normal utilization rate of nitrogen, phosphate and potash in fertilizers is 1:0.42:0.42, and the Chinese Ministry of Agriculture's requirement is 1:0.42:0.3. But the actual average usage here is 1:0.42:0.16. In the first half of 2009, the figure was even farther from the norm, at 1:0.42:0.1. Therefore, China urgently needs to increase the content of potassium in compound