Potash Fertilizer Demand May Slow Down in the Second Half of the Year

In the first half of 2022, the international situation was tense, and the global food security issue escalated again, driving the strong global demand for fertilizers. International potash fertilizer prices rose rapidly, hitting a record high.

 
Potassium chloride demand in Malaysia may slow

Potash fertilizer demand and consumption in Malaysia is expected to slow in the second half of the year as palm oil plantations continue to deal with labour shortages and reduced affordability due to a slump in crude palm oil (CPO) prices.

According to GTT trade data, Malaysia's potassium chloride imports in May fell for the first time this year, while imports from January to April increased significantly year-on-year. Imports in May were 71,900 tonnes, down 58% from a year earlier.

Indonesia and Malaysia are major potash consuming countries in Southeast Asia and the world's largest exporter of palm oil, importing a large amount of potassium chloride every year for palm tree cultivation.

Although the price of potash fertilizer has risen sharply this year, the increase in CPO prices has further increased the pressure resistance of palm planters, so that they can purchase the potash fertilizer needed for planting. However, as the price of potash fertilizer continues to rise, many plantation owners are unable to cope with The rate at which prices are rising, starting to reduce costs by reducing or delaying purchases.

More recently, Indonesia may remove its $200/tonne export tax on palm oil between July 15 and August 31 to help deplete stocks, although no official policy has been confirmed. Affected by factors such as increased supply of palm oil from Indonesia, CPO prices fell, further weakening plantation owners' confidence in potash fertilizer purchases.

High import volume coupled with slow domestic sales also means that there will be carry-over stocks in the second half of this year, which will mean that importers will reduce their demand for potassium chloride imports. At the same time, rising potassium chloride prices and falling prices Palm oil further drags down the demand and consumption of potassium chloride in Malaysia, as palm tree planters seek to replace potassium chloride with high-potassium compound fertilizers to reduce planting costs. Therefore, the demand for potassium chloride in Malaysia is expected to slow down in the second half of 2022.

 
BHP Billiton plans to accelerate potash project

The world's largest miner has been looking for ways to speed up its fertilizer projects as the long-term outlook for fertilizer prices turns more optimistic.

BHP Billiton said in a statement on Tuesday: "We are working to bring forward the first production schedule for Jansen Phase 1 to 2026 and are evaluating options for accelerating Jansen Phase 2 production." Phase one production will begin in 2027.

Last year, BHP finally won approval to build its Jansen mine in Saskatchewan, Canada, after years of wrangling over its huge price tag. BHP Billiton said the Jansen area could operate for a century and eventually grow to a size that rivals the company's flagship iron ore business in Pilbara.

Ragnar Udd, president of BHP's mining operations in the Americas, stressed in an interview in May that the company had been evaluating the option to speed up the fertilizer project.

As the price of natural gas, a key feedstock, continues to rise, fertilizers have also become more expensive. In addition, the global sanctions on Belarus potash, an important fertilizer producer, and Russia's measures to restrict the export of its own fertilizers have also made the market increasingly tight.