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The imbalance between supply and demand of “gold” and potassium reappeared in the beginning of spring, and prices are soaring

① Due to tight supply and strong demand, the price of potassium chloride has risen sharply after the Spring Festival, and the price of main products has generally increased by 300-550 yuan/ton;② Industry insiders predict that the price of potassium chloride is expected to remain strong this year, and the price of annual import contracts will exceed last year.

Cailian News, February 22 (Reporter Xiao Lianghua)“After the Spring Festival, the price of potash fertilizer has increased by about 400 yuan per ton, which is relatively fierce.” On the 22nd, the relevant person in charge of a domestic potassium chloride listed company told a reporter from the Financial News Agency that after the holiday, the supply of potash fertilizer was relatively insufficient, international giants reduced production, and domestic companies overhauled and stopped production. Coupled with concentrated demand for downstream spring plowing, potash fertilizer prices rose sharply.

It is reported that potash fertilizer products are divided into potassium chloride and potassium sulfate, of which potassium chloride occupies the absolute mainstream of the market. At present, the pattern of domestic potassium chloride listed companies is relatively stable, and the sharp rise in product prices is expected to increase the profit margins of related companies.

Regarding the performance of potash in the market outlook, Zhang Jie, an analyst at Longzhong Information’s potash industry, told a reporter from the Financial Union that at present, there is still a temporary imbalance between market supply and demand. The arrival of imported supplies is slightly slow, and international prices are also rising. It is expected that in the short term potash prices will remain high and volatile.

Potassium chloride prices soared after the holiday

After the Spring Festival, the domestic potash fertilizer market has entered an upward channel, and product prices have been soaring, rising by 300-550 yuan/ton. Especially for the large-grain red potassium in the Northeast region, the price continues to rise, exceeding market expectations.

Public data shows that as of February 20, 60% of domestic potassium chloride was quoted at 2800 yuan/ton, compared with 2550 yuan/ton before the Spring Festival;62% of imported potassium chloride was quoted at 3030 yuan/ton, compared with 2650 yuan/ton before the Spring Festival. In the same period, 60% of large grains of red potassium increased from 2700 yuan/ton to 3250 yuan/ton.

“Before the Spring Festival, there were small stocks of potassium chloride in major domestic ports, and after the festival, it was the peak season for spring plowing demand. Therefore, product prices have increased to a certain extent.” Staff from the Securities Department of Salt Lake Co., Ltd.(000792.SZ) said that the company’s potassium chloride products are now arriving at 2850 yuan/ton, an increase of 300 yuan from the pre-holiday period. The demand side is performing well, and the company is producing as planned to meet market demand.

The imbalance between supply and demand drives up prices

In this regard, Zhang Jie said that the domestic supply of potassium chloride imported is tight. After the Spring Festival, some of the supply was replenished, and the port inventory reached the level of 3 million tons. However, under the inspection of national reserves in various regions, traders are reluctant to sell. sentiment dominates.

On the other hand, the equipment of domestic potassium chloride manufacturers is in a traditional winter maintenance state, and most manufacturers will not return to normal levels until March, so the arrival volume in various regional markets is relatively limited.

Staff from the securities department of Zangge Mining (000408.SZ) confirmed this. On the 20th, a staff member of the company’s securities department told a reporter from the Financial Union who called as an investor that although the price of potash has increased significantly recently, the company’s potassium chloride production line is under maintenance.

In addition, international potash giants cut production, which emotionally stimulated the rise in potassium chloride prices.

On February 18, Ural Potash Company announced that its three mines-Berezniki-2, Berezniki-4 and Solikamsk-3-will be temporarily closed for maintenance in the second and third quarters of this year. As a result, the company’s second-quarter production will be reduced by at least 300,000 tons, and third-quarter production levels will be determined by the results of maintenance activities.

The market outlook will remain strong in the short term

Will the market price of potash continue to rise sharply in the future?

Zhang Jie believes that there is still a temporary imbalance between supply and demand in the market. The arrival of imported goods is slightly slow, and international prices are also rising. There are many rumors that the supply of some international suppliers has decreased.

In terms of national policies, ensuring supply and stabilizing prices have always been the theme throughout the spring, and the dilemma of compound fertilizers is unlikely to be significantly improved. “The balance between supply and demand in the potash market continues, and prices will continue to remain high in the short term.” Zhang Jie said.

Some industry insiders told reporters from the Financial Union that the strong performance of potassium chloride will remain after the Spring Festival, but the National Development and Reform Commission will control it. “The current international environment is also creating momentum for negotiating and raising prices for large import contracts. The target price for this year’s large contract may be US$350, and the corresponding domestic price is around 2,900 – 3,000/ton.”

If this price is implemented, the large contract price of potassium chloride in 2025 will significantly exceed that of 2024. Data shows that the annual import contract price of potash fertilizer in 2024 will be US$273/ton, a decrease of US$34/ton from the previous year.

Relevant listed companies hope to benefit

The price of potassium chloride has risen, and the profit margins of relevant listed companies are expected to increase.

China’s annual demand for potassium chloride is about 15 million tons, more than half of which relies on imports. Salt Lake Co., Ltd.(000792.SZ), a domestic potassium chloride producer, has a designed production capacity of 5 million tons in its potash sector, ranking fourth in the world and is the largest domestic potash producer.

In addition, Zangge Mining, a domestic potash fertilizer company, has a production capacity of 2 million tons of potassium chloride, but the actual production capacity has been in a semi-production state for a long time; Potassium Asia International (000893.SZ) currently has a production capacity of 2 million tons in Laos, and the company said it will build 3 million tons of capacity this year; Dongfang Tower currently has 1 million tons of potassium chloride production capacity.

Take Salt Lake shares as an example. If the company’s products increase by 300 yuan/ton and the annual sales volume is 5 million tons, the annual gross profit will increase by 1.5 billion yuan.

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