The Overall Situation of Potash Sector Would Be Gradually Getting Better in the Next Several Years

By CnAgri2017-04-11 15:21:12 Print

In 2016, the total profits of potash sector only reached RMB 2.43 billion, greatly down 40.6% from 2015. BOABC’s analysts think: the overall market of domestic potash market would get better in the future. The main reasons are as the followings:

First, the peak of commissioning of capacity on the international market has passed and the contradiction between supply and demand would be relieved. In 2016, the expansion of global potash producers reached the highest peak: more 6 million MT of capacity from 6 new mines was put into operating, mainly from large potash resource countries such as Canada, Russia and Belarus. Within the next three years, the growth of potash capacity on the international market would slow down obviously and some backward capacity would exit, which would greatly relieve the pressure of potash supply.

Second, the concentration of homemade potash capacity is gradually improving. According to statistics, MOP output (product) in 2016 reached 6.752 million MT. Of which, Salt Lake took up 68.3%, Golmud Zengge Potash accounted for 21.3% and other companies only made up 10.4%. In 2016, there were 25 MOP companies in total, 7 less than 2015. Under the pressure of environmental protection, small and medium companies would be restricted and the concentration of potash industry would further improve.

Third, the domestic demand for potash is strong. The proportion of potash use is 20.8% in developed countries, but only 8% in China. Domestic farm land generally lacks potassium and land areas that need potassium reach 70%, especially in brick red soil areas of south, the content of potassium only is 0.4%. According to the results from the Ministry of Agriculture, the recommendation rate of potash for field grain crops, cash crop and West-Guangdong banana is respectively 22.8%, 31.8% and 50%. So, the use of potash in the domestic is far less than the actual demand. Along with the promoting of soil testing and formulated fertilization, potash consumption would ascend rapidly.