Performance of the Potash Fertilizer Sector in China in 2015

By Qi Zhaoying, Xie Pengfei and Ma Teng, China Inorganic Salts Industry Association

Production

The total capacity of resource-based potash fertilizers in China was 7 750 kt/a (based on K2O) in 2015, which is equivalent to 12 920 kt/a based on KCl, increasing 20.19% over 10 750 kt/a based on KCl in 2014. The output of potash fertilizers in the nation was 5 710 kt (based on K2O), equivalent to 9 520 kt based on KCl, up 8.55% over 2014. Table 1 shows the capacity and the output of potash fertilizer in China in 2015.

Table 1   Capacity and output of potash fertilizer in China, 2015

Item    Capacity
(kt/a)    Output (kt)
    2015    2014    2015    2014
Resource-based potash fertilizers    Potassium chloride    9 160    7 820    7 426    7 330
    Resource-based potassium sulfate    3 020    2 720    2 143    2 010
    Potassium magnesium sulfate fertilizer     2 475    1 680    401    360
    Potassium silicon calcium fertilizer    560    470    69.6    48.0
Processing-grade potash fertilizers    Potassium nitrate    1 615    1 360    675    760
    Processing-based potassium sulfate    4 730    3 320    2 810    1 980
    Potassium dihydrogen phosphate    747    590    315    321
Potassium related  chemical products     Potassium hydroxide    1 172    1 018    733    697
    Potassium carbonate    270    315    156    129
    Food-grade and pharmaceutical-grade potassium chloride    294    300    125    145
    Potassium pyrophosphate    20    20    12    10
    Potassium chlorate    190    150    120    100



1. Resource-based potash fertilizers

1.1 Potassium chloride

There were 32 producers of potassium chloride in China in 2015, the same as that in 2014. The capacity of potassium chloride was 9 160 kt/a (physical goods) in 2015, an increase of 17.14% over 2014, which was driven by output increase in Qinghai Salt Lake where the output was 7 426 kt (physical goods), up 1.31% over 2014, hitting a new historical high.
The price of potassium chloride showed a stepped reduction at first in 2015, after the imposition of the value-added tax in September 2015, and the price included the added tax. By the end of December 2015, the price of potassium chloride was down 7% compared with the beginning of 2015.

1.2 Resource-based potassium sulfate

There were 11 producers of resource-based potassium sulfate in China in 2015, being 1 producer less compared with 2014, with the combined capacity of 3 020 kt/a in 2015, an increase of 11.03% over 2014, driven by the new capacity in Lenghu Bindi Potash Fertilizer Co., Ltd. and CITIC Guoan Group Co., Ltd. The 11 producers manufactured 2 143 kt of potassium sulfate, an increase of 6.62% over 2014.
The price of potassium sulfate saw a considerable reduction in 2015. It dropped to RMB2 750/t at the end of the year. Take the price of Lop Nur potassium sulfate for instance, the price dropped 22.86% from RMB3 500/t in January 2015 to RMB2 700/t in December.

1.3 Potassium magnesium sulfate

There were 14 producers of potassium magnesium sulfate fertilizer in China in 2015. The capacity of potassium magnesium sulfate fertilizer was 2 475 kt/a (physical goods) in 2015, an increase of 47.32% over 2014. The growth was mainly driven by Qinghai Zhonghang Resources Group Co., Ltd. and Zhongnong Xingyuan Potash Fertilizer Co., Ltd. Their combined output was 401 kt (physical goods), an increase of 41 kt over 2014.
The price of potassium magnesium sulfate fertilizer dropped from RMB1 600/t at the beginning of 2015 to RMB1 400/t in December. Compared with potassium sulfate, the potassium magnesium sulfate fertilizer was further recognized in market. The ratio among potassium, magnesium and sulfur in potassium magnesium sulfate fertilizer well meets the needs of crops, so its market space will become more extensive in future.

1.4 Potassium silicon calcium fertilizer

There were 9 producers of potassium silicon calcium fertilizer in China in 2015, with a combined capacity of 560 kt/a (physical goods), an increase of 19.15% over 2014. The output was 69.6 kt, up 45.0% over 2014.
The price of potassium silicon calcium fertilizer fell to RMB1 250/t in 2015. Major raw materials for potassium silicon calcium fertilizer are insoluble potassium resources such as potash feldspar with rich deposit and extensive distribution in China. Potassium silicon calcium fertilizer plants in China have low cost. With low application amount, it is one of important fertilizers for removing the acidification of soil, developing ecological agriculture and achieving the “zero growth” of chemical fertilizers use amount.

2. Processing-based potassium fertilizers

2.1 Potassium nitrate

There were 46 producers of potassium nitrate in China in 2015. The domestic capacity of potassium nitrate was 1 615 kt/a (physical goods), increasing 18.75% from a year earlier. The output of potassium nitrate was 675 kt (physical goods), falling 11.18% from 2014. The operating rate of potassium nitrate was 41.8%, being a little lower than 2014. The total demand was decreased due to the price drop of potassium chloride and potassium sulfate. Market potential growth for the demand of potassium nitrate will be water-soluble raw material fertilizer and energy storage sectors.


Table 2   Production of potassium pyrophosphate in 2015

Item    Capacity (kt/a)    Output (kt)
Potassium pyrophosphate    20    12
Potassium chlorate    190    120
Potassium perchlorate    350    200
Potassium cyanide    2    2



2.2 Processing-based potassium sulfate

There were 113 producers of processing-based potassium sulfate in China in 2015, being 41 more compared with 2014. The total capacity was 4 730 kt/a (physical goods), increasing 42.47% year on year. The output was 2 810 kt (physical goods), growing 41.92% over 2014.
The price of processing-based potassium sulfate fell in 2015 due to the sustained capacity enlargement of resource-based potassium sulfate and processing-based potassium sulfate toppled the balance between supply and demand. The price of processing-based potassium sulfate dropped from RMB3 350/t at the beginning of the year to RMB2 450/t at the end of the year. The market entered a status of sustained slackness.
The total consumption of potassium sulfate in China was around 5 000 kt in 2015, an increase of 21.95% from 4 100 kt in 2014. The average operating rate was 57.8% in 2015, being lower than 66.0% in 2014. The main reason was too much new capacity resulted from sustained high profit in past two years. The output of processing-based potassium sulfate showed a drastic increase and there was also a considerable demand in the export market. The high export tariff, however, greatly affected the expansion of the potassium sulfate export market. Medium and small producers of Mannheim-process potassium sulfate can use their existing products and market shares to develop towards multi-element special compound fertilizers.

2.3 Potassium dihydrogen phosphate

Potassium dihydrogen phosphate is one of major base fertilizers for water-soluble fertilizers and foliar fertilizers. The capacity of potassium dihydrogen phosphate in China was 747 kt/a (physical goods) in 2015, an increase of 26.61% over 2014. The output was 315 kt (physical goods), a drop of 1.87% from 2014. The operating rate was 42.2%. The average production scale of producers increased from 15 kt/a to 19 kt/a.

3. Potassium based chemical products

3.1 Potassium hydroxide

There were 17 producers of potassium hydroxide in China in 2015, being 1 producer more compared with 2014. The capacity was 1 172 kt/a (physical goods), increasing 15.13% over 2014. The output was 733 kt (physical goods), growing 5.16% year on year. The operating rate was 62.5%.  

3.2 Potassium carbonate

The number of potassium carbonate producers was reduced from 8 in 2014 to 7 in 2015. The capacity of potassium carbonate was 270 kt/a (physical goods) in 2015, down 14.29% annually. The output was 156 kt (physical goods), an increase of 20.93% over 2014, driven by the higher total volume of the export market in 2015. With the price reduction of potassium carbonate, insiders attempt to use potassium carbonate in the fertilizer sector.

3.3 Food-grade and pharmaceutical-grade potassium chloride

There were 19 producers of pure potassium chloride in China in 2015, being 7 producers less compared with 2014. The combined capacity was 300 kt/a, being equal to 2014. The output was 125 kt (physical goods), a drop of 13.79% from 2014. The operating rate was 41.7%, a little lower than 2014.

3.4 Potassium pyrophosphate

The biggest producer of potassium pyrophosphate in China is Hubei Xingfa Chemical Group Co., Ltd. Potassium pyrophosphate has gained extensive applications in the food sector in recent years. There is little production of potassium chlorate and potassium perchlorate in the north of China today. The production has mainly been shifted to regions with hydraulic power such as Hunan, Sichuan and Fujian provinces. The output of potassium chlorate is very small today. Potassium chlorate is mainly used in matches. Fireworks producers have turned to use potassium perchlorate. The output of potassium perchlorate has therefore increased in recent years. Table 2 shows the production of potassium pyrophosphate and others in 2015.

Import and export

Due to the shortage of potassium resources, China has a huge gap of potash fertilizers and a long-term dependence on imports. The total import amount of potash fertilizers in China was 9 400 kt (based on KCl) in 2015, up 13.94% from 8 250 kt in 2014.
The price of imported potash fertilizers fell in 2015 and the import amount was therefore increased. The total export amount of potash fertilizers in China was 344 kt (based on KCl) in 2015, a drop of 7.77% from 373 kt in 2014. The main reason was the increase of the export tariff in 2015.

Supply and consumption

The total supply amount of potash fertilizers in China was 21 400 kt (based on KCl) in 2015, increasing 5.57% from 20 270 kt in 2014. The apparent consumption was 16 700 kt (based on KCl), dropping 4.3% from 17 450 kt in 2014. The self-sufficiency rate of potash fertilizers in China is 57.0% today. Table 3 shows the supply and the consumption of potash fertilizers in China during 2011-2015 (based on KCl).

Table 3   Supply and consumption of potash fertilizers in China  (kt)

Item    2011    2012    2013    2014    2015
Output    6 037    5 984    7 920    8 770    9 520
Import amount    6 130    6 343    6 368    8 250    9 404
Total supply amount    14 378    16 276    17 984    20 270    21 400
Apparent consumption    10 397    12 521    14 619    17 450    16 700
Self-sufficiency rate (%)    58.1    47.8    54.2    50.3    57.0



Forecast for 2016

Both the capacity and the output of potash fertilizers in China will maintain a trend of growth slowdown in 2016. The capacity of potash fertilizers is expected to increase to around 13 200 kt/a (based on KCl) in 2016. The output will be kept at around 9 000 kt (based on KCl). The import amount can likely be kept at around 7 000 kt (based on KCl) and the export amount will make a further increase. The total apparent consumption is expected to go up by 10%.
The capacity of resource-based potassium sulfate and processing-based potassium sulfate will make increase by around 500 kt/a (physical goods) in 2016. There was already a capacity of 7 750 kt/a in 2015. The capacity of potassium sulfate is therefore expected to reach 8 270 kt/a in 2016. The price of potassium sulfate is expected to start rebound in August 2016 and possibly go up to around RMB3 000/t at the end of 2016. The price of potassium nitrate will likely go up to around RMB4 500/t.