Prediction of Potash Fertilizer Market in April

Sometimes I just wonder: if there is no urea in this spring market, will it sink? Okay, thank you for urea! With the rising of nitrogen fertilizer, the market of phosphorus and compound fertilizer has been sounding good, so there are half-truths and half-falsehoods in the industry jokingly said: “It is all rising, there is no reason for potash fertilizer itself to continue to fall?” Well, although today is April Fool’s Day, but the author seriously said: April potassium chloride is indeed a little hopeful! The reasons are as follows.

From historical experience, the price of potassium chloride is expected to rebound ahead of time. In January-April 2017, the price of potassium chloride fell. The mainstream price of 62% white potassium in the port dropped from 2100 yuan (ton price, the same below) to 1950 yuan, a drop of 150 yuan. There was a slight rebound in May and June, and the basic stability was between 1950 and 2000 yuan. At that time, the apparent cost was about 1900 yuan, and the importer was slightly profitable. _January 2018 potassium chloride rally came to an end, February to April turned back to fall, 62% of the mainstream port white potassium price from 2250 yuan to 2150 yuan, a decline of 100 yuan. In May and June, there was a significant rebound, rising to 2300 yuan. At that time, the apparent cost was about 1,800 yuan, and the importer was profitable. In the first quarter of 2019, the price of potassium chloride has been falling. The mainstream price of 62% white potassium in the port has dropped from 2550-2600 yuan to 2350 yuan, a drop of more than 200 yuan. Now the apparent cost is about 2300-2350 yuan, and the importer has reached the edge of loss. From the above comparison, we can see that there is no inevitable causal relationship between price fluctuation and price itself, and the thickness of seller’s profit. But this spring, potassium chloride market is poor, importers are under great pressure, so it is natural that we will try our best to stabilize the decline and find opportunities for a rebound.

_In April 2017, the price of potassium chloride has been slowly declining for a whole month, and temporarily stabilized until the end of the month. The monthly decline of port standard potassium and domestic potassium is about 50 yuan, that of border trade potassium is 50-100 yuan, and that of port Dahong granule is the biggest, reaching 150 yuan. By May, due to a slight increase in demand, urea and monoammonium, especially the return of potassium frontier trade from the low end in late April, and the low pressure of its own port storage, the overall price of potassium chloride gradually rebounded. In April 2018, the domestic potassium chloride dropped 50-100 yuan, the port potassium chloride dropped nearly 50 yuan, the port potassium granule dropped 50 yuan at the low end but increased 50 yuan at the high end, and the advance price of potassium chloride in border trade rose 50 yuan because there was no goods. Since May, the rise of white potassium in the port has gradually led the overall price of potash fertilizer into an upward channel. At that time, there were many supports, such as the extension of large contract negotiations, the state storage inspection, the port logistics tension, and so on. So what do we have in April this year, in contrast to the market factors during the bottoming rebound of the previous two years? Frontier trade quotation rebounded by more than 50 yuan, the price of large granular potassium in Northeast Port began to be pulled up, logistics in some areas began to be tense, big contracts had not yet been negotiated, and urea continued to rise, compound fertilizer rebounded, and phosphate fertilizer gradually stabilized, especially there was not much room for further reduction in cost. So from historical experience, the market situation in April this year has been similar to that of May rebound in the previous two years. This year’s price has fallen earlier than the previous two years, and there is not a lot of inventory in the early downstream, so it is possible to rebound earlier in April this year.

From the perspective of supply and demand situation, we can not rule out the possibility of short-term rebound fluctuations. Since the current customs data are only updated to February, we should first look at the market supply and demand situation in January-February. The import volume of potassium chloride in January-February 2017 was 2.2 million tons, the port stock in early January and the end of February 2017 was 2.3 million tons, and the apparent consumption was about 1.7 million tons; the import volume of potassium chloride in January-February 2018 was 1.92 million tons, the port stock in early January and the end of February 2018 was 2 million tons and 2 million tons, respectively, and the apparent consumption was about 1.9 million tons; the import volume of potassium chloride in November-February 2019 was 2.3 million tons, and the beginning of January and the end of February 2019 At that time, the port stock was 1.8 million tons and 2.7 million tons respectively, and the apparent consumption was about 1.2 million tons. At the same time, the output of domestic potassium Market and stock changes are similar, so far this year’s performance is also an increase in leftovers. That is to say, the decline in market demand this spring is still obvious. But optimists believe that the amount of reduction in the earlier period may be released together in the later period, so a relatively large amount of explosion in a relatively small time, it is possible to form a hot scene. There are some reasons for this statement, but at present, the import volume in March is not small, and the total import volume in the first quarter of this year may also create a new historical record (although the import volume of border trade has decreased), but the demand reduction is inevitable, so under the increase and decrease, even if the late demand is really released later, it should be very difficult to play a big role. Influence. Generally speaking, the long-term trend of potassium chloride is not optimistic in terms of supply and demand situation, but the possibility of a short-term rebound in April can not be ruled out.

Looking from the market environment, there are long-term pressures but short-term support value-added tax Take the current port price of 62% white potassium 2350 yuan as an example. A 1% reduction in VAT affects the cost of 20 yuan. If the price of importers remains unchanged, their profits will increase by about 4 yuan, but if the price of importers is reduced by 20 yuan, their profits may decrease by 14 yuan. Regardless of the financial factors, simply looking at the 4, 14 or 20 yuan is not a big deal. It is not enough for the market to adjust once. Therefore, the reduction of VAT does not mean that the price of potassium chloride must be reduced. _The price of potassium chloride in the international market has been stable for nearly half a year, but there are some signs of loosening recently, which may be the key factor affecting the long-term trend. But after all, the price has fallen to the apparent cost line, so it will not affect too much for a while and a half. After all, the big contract has not been discussed, and the international situation in the future is likely to change again. _Recently urea has risen sharply, compound fertilizer is rising, and phosphorus fertilizer is stabilizing and trying to rebound. Will potassium chloride fall alone? Although there is no necessary relationship between them, it will undoubtedly reduce the pressure of potash fertilizer to continue to fall in price. In a word, the downward pressure of the price of potassium chloride has not really been relieved from the market environment (the following will be discussed in detail with the fourth point), but it is still possible to get a proper relief in the short term.

From the cost trend, it is not optimistic, so it is not recommended to increase the hoarding price. At present, the apparent cost of 62% white potassium in the port is about 2300-2350 yuan, which is basically the same as the price. The average CIF price of Brazilian Granules in the international market is US$350, and the standard CIF price in Southeast Asia is US$305. From the historical comparison between China and the two major spot markets, the price of US$290 in China may actually be stable. Although it is at least three months before the signing of the big contract in July-September, the international market is likely to change again, considering the situation of supply and demand, economic environment, climate factors and the trend of agricultural products, at least for the moment, the expectation of the international price trend is not ideal, unless there are strikes, railway collapses and water seepage in mining pits in the future. The emergence of a class of sudden and influential events. Therefore, if we talk about the negotiation of big contracts in 2019, the order of the three possibilities should be smaller decline than stability than rise.

_To sum up four points, the author believes that the space and pressure for the price of potassium chloride to fall still exist, but this is a prediction of the long-term trend, or just a worry, so it is not recommended to stock up potassium chloride for the time being. Sellers should “close as they see fit” and should not over-speculate. However, the rebound of potassium chloride in April is likely to occur, especially in the Northeast where logistics is tight and demand is concentrated. Perhaps the rebound will not be underestimated, so the downstream needs to consider whether the demand in April should be properly stored in advance as soon as possible.