Why can the price of potash fertilizer in China become a "world depression"?

In late March this year, after nearly five months of arduous negotiations, the Chinese joint negotiation team and supplier representative BPC (Belarusian PotashCorp) reached an agreement on this year's potash import contract at a price of US $CFR315 per tonne, an increase of US $10 / tonne over last year's contract price, with other terms unchanged.

In recent years, the contract price of potash in China has been the lowest in the world, and this year is no exception. Why the price of potash in China has become a depression in the world, in addition to the excellent negotiation skills of Chinese negotiators and a good grasp of the market opportunity, there are two main reasons:

First, there is a great demand for potash fertilizer in our country. China is one of the largest importers of potash fertilizer in the world, importing more than 6 million tons every year since 2011, 6.4019 million tons in 2011, 6.3421 million tons in 2012, 6.0297 million tons in 2013, and 8.0312 million tons in 2014, a substantial increase of 33.19% over the same period last year. The huge demand for potash is favored by foreign businessmen, especially when the international potash supply exceeds demand and sales are difficult, the Chinese market has become a market that foreign businessmen must compete for.

Second, the potash fertilizer development strategy has been successful. China's own potassium resources are insufficient, except for a few places such as Qinghai and Xinjiang, which have good soluble potassium resources, most places are lack of soluble potassium. Therefore, a few years ago, China has formulated three "1/3" strategies for potash development: 1/3 domestic production, 1/3 imports, and 1/3 "going out" to set up factories abroad.

In recent years, the output of potash fertilizer in China has developed rapidly, and the self-sufficiency rate of potash fertilizer has increased obviously. Last year, China's potash output reached 6.1047 million tons, breaking the 6 million-ton mark for the first time, an increase of 13.55 percent over 2013. With the increase of domestic potassium production capacity, the proportion of imported potassium has dropped from a peak of 70% to about 50%, and the degree of dependence on imported potash fertilizer has decreased, which has also increased China's initiative in potash import negotiations.

From the second half of last year to the beginning of this year, China imported a large amount of potash fertilizer while international potash prices were low. In 2014, China imported 2 million tons more potash fertilizer than in 2013, and in January this year, another 720000 tons of potassium chloride from the previous year's contract arrived. With the addition of self-produced potash fertilizer, the supply of potash fertilizer in China is carefree, which can fully meet the demand of the domestic market. We are not in a hurry, it is the foreign businessmen who are in a hurry. Because we cannot get the contract with China, it will affect the contract with India and other countries.

The "going out" strategy of potash fertilizer in China has also achieved obvious results. By the end of last year, China had operated 28 potash projects in 10 countries, some under construction and bidding, and some had been put into production. Among them, the Kaiyuan Group Laos project realized to feed the domestic market for the first time to make up for the gap in the domestic market. Last year, Laos declared 90000 tons of potash imports, and in January this year, another 23000 tons were declared.

We must realize that "only by having resources can we have the strength". If there is only demand, and one's own output is seriously insufficient, it is easy to get stuck by others. Southeast Asia, Brazil and other countries have a great demand for potash, but they can only import potash at high prices because of their own serious shortage of potash production. Last year, the import price of potassium chloride in China was 305 US dollars per ton, while that of Southeast Asian countries was 334 US dollars per ton and that of Brazil was 350 US dollars per ton.