By Dai Li, Chemical Department of JLC Network Technology
Analysis on domestic status
1. Capacity of potassic fertilizers
In terms of domestic potassium chloride market, potassium made in China is mainly from Qinghai salt lake, Zangge Mining and some other small-sized producers. According to the statistics of 2021, Qinghai salt lake and Zangge Mining respectively took up 64% and 23% of domestic capacity. The total domestic output of potassic fertilizers was 5 810 000 tons while the apparent consumption was 13 000 000 tons, which meant 55.8% of the domestic demands depended on the import from foreign producers.
2. Import status
Chart 1 shows the trend (year-on-year) of China’s potassium chloride import volume from Jan to Jul of 2021 and 2022. According to Chart 1, the total import volume of potassium chloride in 2021 was 7 569 500 tons, down by 13.4% year on year, 2 254 100 tons from Russian Federation, 2 071 900 tons from Canada and 1 750 000 tons from Belarus. These three countries have remained to be the major exporters which have respectively taken up 29.78%, 27.37% and 23.12% of the total domestic potassium chloride import volume. According to the statistics, during the first half of 2022, China has imported 4 060 800 tons of potassium chloride, down by 10.31% year on year which was caused by the weak demand of downstream industries and less high-priced orders. Therefore, the demand for potassium chloride has fallen after rise. As one of the large potassic fertilizers exporters, Belarus was sanctioned and limited in trade. As a result, the import of potassic fertilizers was to some extent influenced by the suspension of cargo movement especially regional conflicts in which Belarus has been involved. The import quantity and logistic speed were contained and supply of potassic fertilizers was weakened.
Chart 1 The trend comparison (year on year) of import of potassium chloride of China from Jan to Nov, 2021-2022
3. Price trend
Chart 2 shows the trend of market price of potassium chloride of China in 2022. In perspective of the big contract of 2022, the contract price then was US$590/t CFR, while the cost of potassium chloride was estimated RMB4 260/t-RMB4 300/t (62%), basically meeting the expectation according to the contracts of previous years.
Chart 2 The trend of market price of potassium chloride of China in 2022
The potassium chloride market has been continuously weak since the beginning of July. During the low season of potassic fertilizers, potassium chloride market has been running in the down channel because of less demand and the impact of new supply from border trade, overlaid by the fall after the rise of international potassic fertilizers market. Domestic market has been increasingly declining and the concerns for the dip of downstream industries has been accumulated.
Currently, there is an oversupply in domestic potassium chloride market. Although the orders of border trade in later period are uncertain, more China-Europe freight trains and port inventories which have hit about 2 100 000 tons and have been expected to be shipped slowly during low season, will pile up market pressure. It is difficult to turn around the weak market quickly. Influenced by EnergySupply Ensuring Policies, the potassic fertilizers producing units have been at full capacity. The potassic fertilizers producers have optimized and upgraded technologies in the areas of brine mining, saltern, solid-liquid transformation to ensure the potassic fertilizers capacity and output increase. In the first half of 2022, 50 000 000 m3 more of original halogen were collected. In 2022, the scheduled output of potassic fertilizers producers is about 5 700 000 tons, which means a relatively high total supply of potassic fertilizers in the latter half of 2022, bad news for the market.
The characteristics and tendencies of potassic fertilizers industry
1. Fluctuation of domestic potassic fertilizers output
In terms of characteristics of the industry, the price of big potassic fertilizers will be fluctuated by the big contracts and demand changes of each year. The domestic demands for potassic fertilizers are mainly compound fertilizers with few demands for chemical and agricultural purposes.
From 2020 to 2021, China has adjusted its resource-based potassic fertilizer products categories, and as a result, the capacity for potassic fertilizers was slightly reduced to 5 219 600 tons in 2021. Since the beginning of 2022, influenced by mineral resources, part of small-sized producers were not be able to keep a stable rate of operation, and some producers even shut down except the producing units of large-sized salt lake which have been running basically normal. Consequently, a short supply is expected.
2. The increase of domestic potassic fertilizers output
The priorities of potassic fertilizers are to develop and use whole sets of independent industrialized technologies and equipment on the resources such as low-grade potash from salt lake, sea water potash, insoluble potash and well and rock salt, establishing the industrialized demonstration bases for the comprehensive development of salt lake and develop a comprehensive engineering technology system inclusive potassium, boron, lithium and magnesium.
It is important for China’s potassic fertilizers industry to control capacity reasonably, keep the price stable and hold on to a certain domestic output as the bottom line. Therefore, on the basis of developing the resources in a protected way, firstly, the capacity of potassic fertilizers industry should be stabilized; secondly, the industrial and product structures should be readjusted and the domestic exploration of potash mines should be fastened in order to discover more potash resources in the country. With conditions that the international market is favorable and China breaks through in exploring potash resources home and abroad, China should support enterprises with policies of investments, taxes, import and export in the field of exploring and developing potash resources.
3. Insist on optimizing potassic fertilizers varieties
According to China’s crop-based product mix and nutrient demands, it is prioritized to develop fertilizers of various specifications such as potassium chloride, potassium sulfate, magnesium potassium fertilizer, potassium nitrate and monopotassium phosphate and also develop those efficient and environment friendly potassic fertilizers varieties. Considering that Chinese soil has become more and more acid, it is important to base on industrial advantages and develop potassium-based water-soluble fertilizers, all element specialized fertilizers containing medium & micro elements and organic matter, and mineral fertilizers containing minerals with potassium. At the same time, the potassic fertilizers reserve mechanism should be set up to improve the efficiency of resource comprehensive utilization. The last but not least, potassic fertilizes producers should extend their product range to the industrial grade potassium salt products such as potassium hydroxide, potassium, carbonate, etc. and start developing the high value-added potassium salt products such as electronic grade potassium nitrate products, food grade potassium chloride products, etc.
