This year, the global potassium chloride market will be about 70 million tons

 Russian potash producer Uralkali recently announced its 2023 financial report, although the company in 2023 due to global potash prices lower than 2022, resulting in a decline in performance, but Uralkali still gave an optimistic outlook for 2024 development prospects. It is predicted that the global potassium chloride market will reach 69 million to 71 million tons in 2024, and the focus of demand growth is mainly in Southeast Asia and European markets.

According to the annual report, Uralkali's revenue in 2023 was $4.266 billion, down 10% from the previous year. Net income was $3.497 billion, and total net income decreased 18% compared to the same period last year. Among them, affected by the annual price decline and rising transportation costs, potash operating income was $2.756 billion, down 20% year-on-year. From the production and sales point of view, the company's 2023 potassium chloride production of 9.8 million tons, an increase of 44%; Potassium chloride sales of 10 million tons, an increase of 58%.

Uralkali said the company was forced to reduce export sales to 3.8 million tonnes in 2022 due to geographical factors. In 2023, the company shifted its focus to adapting to the new environment, strengthening supply stability and supporting sales, with export sales reaching 7.6 million tons. Higher production and sales have partly compensated for the sharp fall in potash prices.

Uralkali also pointed out that between 2022 and 2023, the United States, the United Kingdom, the European Union, Switzerland and several other countries carried out extensive financial, personal, export and import operations against various sectors of the Russian economy, including the financial system, officials, companies, the defense sector. This has resulted in the blocking or restriction of the assets, funds and operations of certain Russian banks, companies and individuals in these countries. The sanctions have had and will continue to have a noticeable impact on Russia's economy and international trade, leading to changes in the international trade environment and the business landscape in which the company operates.

These sanctions restrictions have also led to significant changes in the regional structure of the Company's export sales, in particular the imposition of sanctions by EU countries on potassium chloride originating in or exported from Russia, including import quotas, and the Company's exports to the EU have fallen to an all-time low.

Speaking at the St Petersburg International Economic Forum, Dmitry Tatyanin, chairman of Uralkali's board of directors, also admitted that "in the European market, the company encountered difficulties in transit through the EU to third countries, a challenge that affected the company's export strategy and also posed a certain threat to its position in the global potash market."

As for demand, Uralkali believes that Brazil maintained its position as the most active spot market in 2023, with MOP imports exceeding 13 million tonnes, a surge that can be attributed to increased availability and expanded acreage. In the Chinese region, according to customs data, potash imports in 2023 also broke records, totaling 11.7 million tons, up 46 percent from 2022, and MOP production, mainly from Russia and Belarus, increased significantly, up 78 percent to 6.4 million tons.

In North America, due to the expansion of planting area and favorable prices of agricultural products, the market demand is very strong in the spring, resulting in a decrease in fertility in the soil and promoting an increase in imports to the United States; At the same time, potash demand in Europe, the Middle East and Africa continues to be under pressure from higher prices, limiting import growth; Potash imports into the Indian market are still below historical levels, reaching 3 million tons in 2023. In Southeast Asia, potash consumption growth has been restrained amid unfavourable fertiliser prices, resulting in overall demand in the region remaining below historical averages.

For the large contracts, Uralkali believes that Canpotex's pricing is not in line with current market conditions, affecting the effect of regional and global competition. In June 2023, Canpotex finalized a potash contract with China at a price of $307 / mt CFR, down $283 / mt from the previous contract price, and prior to this, Canpotex signed a potassium chloride supply contract with India at a price of $422 / mt CFR in April 2023. This is a decrease of $168 / ton from the 2022 contract price. After Canpotex signed the contract with China, the price of large contracts in India further dropped to $319 / t CFR.

For the 2024 outlook, Uralkali remains cautiously optimistic about global potassium chloride demand and believes that prices in key consumer markets and potash supply from producers are decisive factors. According to the company's forecast, with the recovery of potash exports from CIS countries and favorable market conditions, the global potassium chloride market is likely to reach 69 million to 71 million tons in 2024.

Despite record potash imports in Brazil and China in 2023, demand in the region remains strong. The main growth in demand is expected to be in Southeast Asia and Europe. Uralkali also expressed concern about transportation and believes that with tensions in the Middle East and uncertainty in the Red Sea for cargo transport, it may prompt changes in the logistics chain to enhance cargo transport security and may lead to an increase in freight and insurance rates in 2024, this change may have some impact on potash costs.