Potash Big Contract and Fertilizer Market Analysis

By CnAgri2014-03-05 13:11:52 Print At the beginning of 2014, the potash big contract in the first half year of 2014 receiving much concerns has been settled. The negotiation group of China potash import union(Sino-agri, Sino-Fert and CNOOC) led by Sino-agri reached an agreement on potash supply in the first half year of 2014 with Russian Uralkali company. 700,000MT potash will be supplied at standard potassium chloride FOB price of USD305/MT, down 23.7% from the price in the big contract of the first half year of 2013.
　　　
　　　Soon after that, Canadian Potash Corp announced North American Canpotex Corp signed potash supply by ship contract with Sino-fert to supply 700,000MT potash in the first half year of 2014 at the same price as Uralkali.
　　　
　　　Market was not overreacted to the contract and domestic potash price saw no great fluctuation, since the contract price was basically as expected and the price had been adjusted to USD300/MT. Currently, in Chinese ports, quotation of Russian red potash is RMB2000-2020/MT, white potash RMB2150-2180/MT and domestic 60% potassium chloride RMB1980-2050/MT. In the new contract, as the price of USD305/MT, equivalent to RMB1850-1880/MT, plus cost of 150 yuan, it is about RMB2000/MT, close to current price.
　　　
　　　Potash price has long been unstable. In 2008, it surged to USD1000/MT and in 2006 it slumped to USD150/MT.  As the only uncertain factor of potash market, signing of the big contract  suggests NPK market go steady, since potash price has close relationship with NPK market.
　　　
　　　In addition,  confirmation of the big contract price also has indirect influences on nitrogen fertilizer and phosphate, restraining the growth rates.  Prices for nitrogen, phosphate and potash have a certain proportion and are not likely to have great differences. NPK is priced according to its nutrients and no matter what nutrient it contains, the price is the same, based on which, prices for nitrogen fertilizer and phosphate have limited growth space as potash price is the lowest.
　　　
　　　Due to poor sales, Uralkali Company, largest potash enterprise in Russian, announced to withdraw from the sales union with White Russia-BPC in the end of July 2013 and would would sell and export potash products all by it self, causing potash price to decline substantially in the second half year of 2013. Whether the same condition will occur in 2014, such as poor sales, disintegration of potash union or potash price decline, needs paying attention to. If potash price continued declining, the whole fertilizer price will be dragged down.

From “China Fertilizer Market Weekly Report”