Border trade import is an important part of China’s potash fertilizer trade. Recently, it has been reported that both shipping and import of potash fertilizer have entered a period of suspension of negotiations. The potash trade will enter a standby period in June. How much will this affect the price of potash fertilizer in China?
Potassium Fertilizer in Ural Suffered Permeability Accident
Recently, the world’s largest potash manufacturer Ural Potassium Fertilizer’s Solikamsk No. 2 mine has suffered a flooding accident, and the losses are still not assessable. “Ural Potassium Fertilizer Permeability Accident has a greater impact on the international price of potash fertilizer.” Industry insiders in an interview with reporters said that the flooding accident is fatal to the solid potash fertilizer mining area.
Data show that Ural Potassium Fertilizer Company is one of the world’s major potassium fertilizer producers, the company’s potassium fertilizer output accounts for about 20% of the global potassium fertilizer output. The No. 3 mine of Ural Potassium Fertilizer was closed permanently in 1973 because of the flooding accident, and the No. 1 mine was closed permanently in 2006, which also promoted the bull market of potash fertilizer after 2006 to a certain extent.
Industry insiders told reporters that every year China will sign large contracts with Russia, Canada and other potassium-rich countries to transport potassium chloride by sea, and it is the agreed price of the big contract that has the greatest impact on the domestic potassium fertilizer price. The flooding accident will certainly have an impact on next year’s big contract price, and the domestic potash fertilizer price will also be affected accordingly.
It is understood that the supply of potassium fertilizer in China mainly consists of import and domestic components. With the continuous improvement of domestic potassium production capacity, the proportion of imported potassium fertilizer has decreased from 70% to 45%, but imported potassium fertilizer is still an indispensable part of domestic potassium fertilizer supply.
However, professionals believe that the increase in potassium fertilizer prices is still difficult to predict. Specifically, domestic potassium fertilizer prices also depend on market turnover and industry demand.
Border Trade Potassium Fertilizer Import Stagnation
According to reliable sources, China’s border potash fertilizer trade has maintained and continued the spot trading mode of border trade due to the geographical relationship between China and Russia. Especially based on long-term cooperative relationship, the two sides will start the process in mid-May to negotiate the price and quantity of the next month. However, Ural Potassium Fertilizer Co., Ltd. has recently continued to raise its quotation for potash fertilizer in China’s border trade on the basis of May’s price, and is resolute in its attitude. On the contrary, the price trend of potash fertilizer ports in domestic frontier trade broke down more than 150 yuan in late April.
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Industry insiders believe that, in view of Ural’s attitude towards reducing potassium fertilizer and maintaining its price, as well as the actual market demand and price of land-borne potassium fertilizer, it is expected that in the short term it will be difficult for both sides to reach a consensus, and that there will be a shortage of potassium fertilizer in border trade from mid-June. Border trade imports will also enter the period of suspension of negotiations historically. This is the first time in the history of importing potash fertilizer from border trade.
It is understood that border trade import is an important part of China’s potash fertilizer trade. It has been accepted by domestic users because of its short cycle and rapid price response. In fact, from some data, it also reflects its active degree in the potash fertilizer market. Since 2005, the import of potassium fertilizer in frontier trade, with Manzhouli as the main port, has gradually become an important supplement to the import of potassium fertilizer in large trade and another important force to guarantee domestic potassium fertilizer supply.
Sources say that the negotiations on the big trade contract, which started in September 2018 and expired in June 2019, have not accelerated due to the approaching, and substantive contacts have also been delayed. At the same time, the difference in expectations between the two sides has led to the suspension of negotiations after the delivery of some routes of goods. Throughout the market situation, domestic frontier trade stopped importing and the number of shipping basically ended. Negotiations on shipping are far away, foreign prices are demanding, and both imports of potash fertilizer have entered a suspension period.
How will the price of potash fertilizer go?
Because of the suspension of negotiations on both shipping and import of potash fertilizer, uncertain negotiation results have kept the price of potash fertilizer stable for the time being. In terms of domestic potassium fertilizer, the production plant of Qinghai Salt Lake Group operates normally, and the implementation price of 60% of the base product of salt lake is 2350 yuan/ton. Customer prices remained stable in all regions. At present, the inventory of powdery, granular and cold crystallization platforms is 28,000 tons, and that of warehouses is 317,000 tons. The total amount of packaged goods that can be sold and shipped is 345,000 tons. Tibetan potassium fertilizer 60% powder price of 2350 yuan/ton, enterprise inventory of about 110,000 tons. The local small factory rate is low, the transaction is relatively cold.
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In terms of imported potassium, there are many ports in stock at present. The data show that the port stock of imported potassium is about 2.6 million tons. At present, port potassium imports have begun to fluctuate in a narrow range. Although the quotation of traders is stable, the transaction of new orders is relatively slow, and the real unit price has fallen slightly. The mainstream price of 62% white potassium in Northeast China is around 2350-2380 yuan/ton, and the transaction reference is around 2350 yuan/ton. Russian pink prices range from 2150 to 2200 yuan per ton. There are fewer new potassium fertilizer frontier trade goods in the near future, and the previous quotation is higher. At present, the reference price of 62% Russian-White ports is 2050-2080 yuan/ton, which is 100 yuan/ton lower than that of last month.
In terms of demand for potassium fertilizer, the demand for potassium fertilizer continues to decline after entering the summer market. At present, there is no news of any big contract, but the port potassium fertilizer inventory is much higher than the same period in previous years. After the demand for potassium fertilizer enters the off-season, the raw material purchasing of compound fertilizer manufacturers is limited, and the supply and demand are often one-sided. Industry insiders said that the short-term contradiction between supply and demand of potash fertilizer has been significantly improved, and market prices are now temporarily stable.
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