On a macro level, the global potassium fertilizer supply exceeds demand, relying on trade adjustment; on a micro level, the cost of marine transportation has increased, making short-term potassium fertilizer prices volatile.
According to the financial app Zhitong, in the macro view, the global potassium fertilizer supply exceeds demand, relying on trade adjustment. It is expected that Nutrien's global potassium fertilizer production will be between 68-71 million tons in 2024, with supply coming from Canada, Russia, Belarus, and Laos, and demand primarily increasing in Southeast Asia, resulting in a tight balance. On a micro level, the potassium fertilizer market is an oligopoly with a global trade pattern. The supply and demand itself is vulnerable, and the three factors that currently affect global potassium fertilizer prices (regional supply and demand relationship; oligopoly supply capacity and bargaining power; logistics cost) are all positive, making short-term potassium fertilizer prices volatile.
The main views of Western Securities are as follows:
Global potassium fertilizer resources are concentrated, and the increase in new projects is limited by the cost constraints of existing projects. In terms of reserves, Canada, Belarus, and Russia together account for approximately 70% of the world's potash salt resources, while China accounts for only 5% (mainly from salt lakes). The resources determine production costs, and Russia has the lowest production cost of mineral potash in the world. According to data from Korepotash's official website, the cheapest Russian producer's potassium fertilizer FOB cost in 2022 is about $100/ton; FOB cost for potassium fertilizer production enterprises (salt lake type) within China is about $120-140/ton, which is in the lower-middle range globally; the Laos project is still under development, with different production costs for each company, and as of the end of 2023, only Asia-Potash International and Qingdao East Steel Tower have achieved million-ton capacity.
The global potassium fertilizer supply and demand is expected to be tightly balanced in 2024. On a macro level, the global potassium fertilizer supply exceeds demand, relying on trade adjustment. According to Nutrien's data for 2023, the total global potassium fertilizer supply in 2022 was 46.75 million tons, exceeding total demand by 5.01 million tons, but exports from Belarus and Russia are restricted, coupled with increased imports by various importing countries, resulting in a significant regional imbalance in supply and demand. It is expected that Nutrien's global potassium fertilizer production will be between 68-71 million tons in 2024, with supply coming from Canada, Russia, Belarus, and Laos, and demand primarily increasing in Southeast Asia, resulting in a tight balance.
On a micro level, the cost of marine transportation has increased, making short-term potassium fertilizer prices volatile. The potassium fertilizer market is an oligopoly with a global trade pattern. The supply and demand itself is vulnerable, and the three factors that currently affect global potassium fertilizer prices (regional supply and demand relationship; oligopoly supply capacity and bargaining power; logistics cost) are all positive, making short-term potassium fertilizer prices volatile. From a domestic perspective, the high-priced and high-level port inventories have been gradually reduced, reducing the downward pressure on prices. Due to the increase in marine transportation costs, potassium fertilizer prices are expected to maintain an upward trend during the peak demand season.
Recommended stocks to watch: Qinghai Salt Lake Industry (000792.SZ), Asia-Potash International Investment (000893.SZ), Qingdao East Steel Tower Stock (002545.SZ), Zangge Mining (000408.SZ).
Risk Warning: Risks of environmental inspections and production restrictions, global logistics supply chain risks, international geopolitical risks, weather disaster risks, etc.