Potash Demand Is Weak, International Suppliers Are Reducing Production

- Oct 19, 2019-

Last week, the low-end price of Brazilian granulated potassium chloride rose by US$5/ton, reflecting that the market price range narrowed after a period of large quotation interval, which was contrary to the long-term price decline trend.

The US price of granular potassium chloride barge reached a minimum of 238-245 US dollars / ton in the past 17 months. Market participants cannot predict whether prices will fluctuate significantly before fertilization in the fall. The still-harvest autumn harvest and the bad weather in the corn belt area seem to reduce the fertilization period and reduce the demand for fertilizer in the fall.


Potash demand is weak, international suppliers are reducing production

 

Europeanization delays production capacity

Europeanization expects its two new mines to reach a maximum capacity of 8.3 million tons per year in 2025-2027, and the original plan for 2017 will be reached in 2024-2025. The Volgakaliy mine will maintain a production of 50,000-100,000 tons by 2020. Progress due to geographical reasons is slower than expected.

Large contract negotiations delay the suppression of spot prices in Southeast Asia

Demand for Southeast Asia, which has been affected by a series of problems, will further decline as it does not see signs of a large contract between China and India and expects large contract prices to fall. Under normal circumstances, the next round of bidding should start from October, but based on factors such as insufficient demand this year and limited capital flow of farmers/factories, local dealers said that this round of bidding may actually appear in November.

Outlook outlook

India's big contract price will set for Asia

Suppliers seek to minimize the difference between the new contract and last year. On the other hand, buyers want to cut prices as much as possible, consistent with the drop in spot prices throughout the year. The new big contract will bring better liquidity, but it may drive down the price in Southeast Asia, depending on the final contract price.