2019 Potash Contract Negotiation

- May 02, 2019-

At present, the total amount of potassium chloride port in China is still about 2.5 million tons, and the total amount of port deposits from late April to the end of last year was only 215-2.3 million tons. It is rumored that the amount of imports will be greatly reduced in the later period, but after all, it is only a rumor, which year is not the case? And basically, the import volume per year has been significantly reduced since May, and the chlorine in May-August in recent years. The monthly average import volume of potassium is only 300,000-500,000 tons, so even if it is reduced, it depends on the actual degree, and it should be supplemented by the domestic potassium production. Therefore, after all, there was a lot of imports in the first quarter, and there were a lot of temporary deposits in Hong Kong, so we are not in a hurry to talk about it.

Some people may say that not lacking now means no shortage in the future. Now, if you don’t worry about it, you will become passive in the later stage and be forced to accept high prices. Well, it makes sense to say this, it is possible, but the simple reason that the importer does not understand? So I am not in a hurry to talk, the author is more inclined that the late arrival volume should not be too small, at least in the short term, we still have enough The bottom of the gas.

Or, from another angle, in the business negotiations, perhaps the importer has not yet negotiated the new import price, the domestic price can be maintained above the cost line or above the profit line that is satisfactory to them, so people are not in a hurry, then that is the case. What are we worried about?

It is also understood that the international potash price has stabilized for half a year after the seller’s continuous improvement and promotion. This international situation is very beneficial to us, and on the other hand, the international new production capacity is constantly “exposure”. Even if most of them actually have to release production for another year or even three or five years, the psychological impact has gradually biased the voice to the buyer.

As a result, the possibility that China's large contract price will rise further on the basis of last year's 290 US dollars is undoubtedly the smallest. Now, the possibility of maintaining stability is the biggest, and it is not impossible to make a small drop. Therefore, foreign businessmen are not eager to negotiate with China. They have not made good support for the time being, or perhaps they are hoping that China will gradually change from surplus to out of stock, so that the Chinese market can be used to stabilize or even push up international potash prices.

Of course, in the end who can drag over, this is not something that can be seen now. The confrontation between the two sides is calm but absolutely stimulating. Moreover, it does not mean that the decline in China's output will necessarily mean that it will be led by foreign suppliers. The oversupply of international production capacity and China's “going out” strategy make us still have room for manoeuvre.

So we can understand this completely until there is no news of big contract negotiations: because the stock is not out of stock or the price is not bullish, the negotiations have not yet started, and the reversal of international potash prices is a matter of great strength, so at least We are not in a hurry in the short term.

The so-called big contract negotiation is actually a weather vane that can comprehensively reflect the market situation in a certain period of time. Recently, domestic potassium chloride prices have risen and fallen. In general, the temporary stability is near the apparent cost line. As far as the market itself is concerned, how good or bad it is. It can be said that the price of potassium chloride has once again stood at the crossroads. The key to the future trend is the actual situation of domestic potassium production, followed by changes in international markets.

For the time being, this wind vane is biased towards the downside. Even if space is limited and there is still possibility of change, at least it should not be considered for the second half of the year. However, for downstream users who still have demand, because the seller will not worry about the big drop, it will be as good as possible. Reluctant sales and speculation will definitely appear from time to time, so proper early purchase is still necessary.