Securities Times reporter Yu Shengliang
Major changes have taken place in the regulation of potassium chloride in my country. Last year, the price was mainly controlled, and this year, the supply was mainly guaranteed, mainly due to changes in domestic and foreign situations, especially overseas.
my country's joint negotiation team for imported potash fertilizers reached an agreement with Canpotex, an international potash fertilizer supplier, on the 15th to determine the import price of potassium chloride at US$590 CFR/ton, an increase of 139% year-on-year, ensuring a stable supply of core main channels.
The finalization of the contract price is related to the price in the international market, and it is also related to the drastic changes in the international market.
The ton price of 590 US dollars has risen sharply compared with last year, but it is still a price depression from a global perspective, especially compared with South America and other regions.
After the rise of potassium chloride since last year, under the background of rising agricultural prices and increasing enthusiasm for planting, the market trend has not been destroyed, and has intensified recently.
Recently, China's two major sources of goods have encountered risks. One is Belarus, which was embargoed on February 1 this year. Although the previous embargo has been said for a long time, it has not been implemented.
In 2021, China will import about 1.75 million tons of Belarusian potash fertilizer, accounting for 23% of China's total imports. If the recovery of Belarusian potash fertilizer export takes a long time, China's potash fertilizer import volume will be reduced.
In addition, Russia's prospects are not very clear due to the tense situation in Ukraine and Russia.
Last year, China imported about 2.25 million tons of potassium chloride from Russia, accounting for about 30% of China's total imports.
These two countries account for half of China's potash imports.
Russia and Belarus are also major countries exporting potash fertilizers internationally. If any one of them has problems, it will reduce the global supply of potash fertilizers and boost international potash fertilizer prices.
This is the historical background that India and China took the lead in signing large contracts with Canadian potash companies.
Nutrien, the world's No. 1 Canadian potash fertilizer company, has a stable supply of goods, and because of its good resources, it has the potential to expand production, and its locked price is conducive to continuous supply. If the price continues to rise in the future, it can also lock in costs.
Nutrien boosted potash sales to a record 13.6 million tonnes last year.
The international market expects the company's potash fertilizer sales to reach a record 13.7 million tons to 14.3 million tons this year, and its output can be expanded if restrictions on Belarusian exports are implemented.
Last year the company generated $1.2 billion in net income in the fourth quarter and $3.2 billion for the full year, and Nutrien expects full-year 2022 adjusted EBITDA guidance of $10 billion to $11.2 billion, driven by higher potash prices Big winner.
Last year, my country's imported large contract price was 247 US dollars / ton, the price is very beautiful, far lower than the international market, but because of this, the import volume has shrunk.
In 2021, domestic imports of potassium chloride will be 7.5662 million tons, a year-on-year decrease of 1.1 million tons.
This has also led to a decline in my country's potash fertilizer stocks.
Now is the spring ploughing season. During the peak period of fertilization and replenishment of stocks, there will be seasonal demand peaks. However, the domestic potash fertilizer market has encountered many difficulties. The supply of domestic potassium chloride enterprises is reduced, and the supply is tight. The price has risen sharply, driving the downstream fertilizer prices to also show an upward trend.
In this case, it is necessary for the government to quickly finalize a large contract to ensure the supply of potassium chloride in my country.
In September last year, the State Administration for Market Regulation imposed a fine of 1.6 million yuan on the grounds that Salt Lake Co., Ltd. had significantly raised the price of potash fertilizers without authorization.
The reason is that when Salt Lake Co., Ltd. sells potash fertilizer products, its production cost has not changed significantly, and the sales price has been greatly increased, which violated the provisions of Article 14 (3) of the "Price Law of the People's Republic of China".
In addition, the State Administration of Market Supervision and Administration imposed a fine of 2.6 million yuan on Sinochem Fertilizer, on the grounds that in the first half of last year, when the import price remained unchanged, Sinochem Fertilizer sold potassium chloride at a substantial price increase, which pushed the domestic potassium chloride price too high. Rapidly rising, it violates the provisions of Article 14 (3) of the "Price Law of the People's Republic of China" on prohibiting operators from driving up prices.
At that time, Salt Lake Co. lowered its ex-factory price. The performance of Salt Lake Co. declined in the fourth quarter of last year. One of the reasons given was the difficulty of seasonal production, which is very rare in history.
Salt Lake shares raised its price sharply in January and February this year, far exceeding the price level when it was punished that year.
In addition, the government also released the national reserve of potassium chloride, intending to cool down the market, and compound fertilizer companies actively bid for it.
However, potassium chloride is a typical large international market, and similar to oil, the domestic and international markets are highly correlated.
Domestic efforts to lower local market prices are subject to changes in international imports.
In the case that the general trend cannot be reversed, it is necessary to "turn around", and it may be a better choice to follow the market.