Recent Price of Potassium Chloride and Its Market Hot Again

1. Global potassium chloride market prices have continued to rise since 2021

Recently, the domestic price of potassium chloride has been close to the international price trend. Domestically, the average price of potassium chloride market rose from RMB 2,000 per tonne at the beginning of 2021 to RMB 3,200 per tonne at the end of the year and continued to rise at the beginning of 2022.

As of mid-February 2022, the average domestic KCl market price had exceeded RMB 3,470/mt, up 70.85% year-on-year.

Similarly, internationally, Russian, Vancouver and Northwest European potassium chloride FOB prices were quoted at $625.5/mt, $610.0/mt and $631.5/mt respectively, up 217.5%, 197.6% and 221.4% respectively compared to the beginning of 2021. After 12 years of slump, global potassium chloride prices have returned to an upward trend. 2.

2. Global supply gap increases, supply growth slows

Last year, the EU and the US announced sanctions against the Belarusian potash industry, and the sanctions are continuing to fester. According to NRCAN data, the production and export volume of potash in Belarus will account for 17.6% and 21.0% of the global total in 2020 respectively.

Currently, Lithuania has announced the termination of the agreement between the state railroad and Belarus for potash transportation.

Due to cost and capacity reasons, a suitable transport solution has still not been identified for potash exports from Belarus, and a global supply-demand mismatch has been formed with a supply gap. Globally, the growth rate of global potash production has gradually slowed down since 2018 since 6.8%, and FAO expects the growth rate of potash production to drop to 1.7% by 2021.

Combined with the above status quo, we expect the supply of potash to tighten in the short term against the backdrop of sanctions on potash exports from Belarus and the mismatch between global supply and demand.

3. Downstream agricultural products boom upward, potash demand grows steadily

From the beginning of 2020 to mid-February 2022, the CBOT futures settlement prices of corn, wheat and soybeans increased by 66.3%, 42.4% and 65.5% respectively, and are still on an upward trend.

Rising agricultural prices are driving farmers' motivation to plant, which in turn is driving potash demand growth. According to OECD-FAO forecast, the global acreage of major agricultural products will increase by more than 8 million hectares by 2030 compared to 2021, with corn increasing by 4.3% and soybean by 5.6%. The increase in planted area will help drive the growth in demand.

4. High domestic dependence on imports and declining stocks

China's potassium resources are scarce and the dependence on potassium chloride imports from 2017-2021 is maintained at a high level between 50% and 60%. As a result, domestic demand for potassium chloride is strong and production and sales of enterprises are relatively stable.

As of mid-February 2022, domestic potassium chloride stocks stood at 258,000 tons, down 19.6% year-on-year and 38.4% compared to the beginning of last year. With the onset of spring cultivation, domestic KCl demand will be released and inventories may fall further.

Combined with the above, in the short term, there is a supply gap due to the international sanctions against Belarus and the mismatch between global supply and demand.

Combined with the arrival of spring cultivation in the northern hemisphere, the demand for potash will be further released and the supply will be tightened in the future.

In the long term, the global potash supply growth will slow down and the agricultural boom will drive the steady growth of potash demand. We expect the potash industry to maintain an upward boom in 2022.

According to market analysis, in the context of upward boom cycle of potash industry, relevant leading bidders may benefit, such as Asia Potash International, Salt Lake, Zangger Mining, Orient Iron Tower, etc.

Latest Quotation News

Up to now, the domestic market price of imported potassium chloride is stable, unchanged from February 18. The self-carrying price of 62% white potassium at the port is around RMB 4300-4400/ton, a slight increase. The border trade 62% Russian white potassium is around RMB 4300-4400/ton, a slight increase.

 Domestic Salt Lake potassium chloride ex-works price was RMB 3490/ton, unchanged from the offer on February 18. Domestic potassium 60% white potassium market price is around RMB 4,000-4,100/ton.

The downstream potassium carbonate and potassium nitrate market has been consolidating at a high level recently, and the downstream purchasing enthusiasm is good.