Price trend:

Recently, the domestic potassium chloride market ended the bearish sentiment that followed the signing of major contracts, with prices rebounding and returning to high levels. As of December 9th, the SunSirs' benchmark price for imported potassium chloride was 3,533.33 RMB/ton, an increase of 0.95% compared to the beginning of the month (3,500.00 RMB/ton).

Market Analysis

Supply supported: Port inventories were at historically low levels for this time of year, coupled with the fact that domestic potassium production was entering its traditional winter maintenance period, resulting in tight supply in the spot market.

Demand expectations were picking up: particularly in Northeast China, the market was starting to recover seasonally, and purchasing demand was gradually being released. Against this backdrop, market sentiment had shifted from bearish to stable, and prices in northern regions have risen significantly. Among them, Lao potash and granular potash had seen the most significant price increases due to their cost-effectiveness and regional advantages, driving a general improvement in market sentiment. 

Supply Side:

Domestic potassium chloride: Operating rates remained low, at approximately 45.3% last week, with weekly production of approximately 85,500 tons, a decrease of about 10% compared to the previous week. Manufacturers' inventories decreased significantly by 56.1% year-on-year to 291,500 tons, and most of the supply was directly provided to downstream compound fertilizer factories, resulting in limited availability of loose cargo in the market.

Imported potassium chloride: Although port inventories recovered, reaching approximately 2.47 million tons as of December 4th, an increase of 60,000 tons from the previous week, this was still a significant decrease of 430,000 tons compared to the same period last year. The increase in inventory had not yet effectively translated into readily available market supply, and spot supply remained tight in most regions.

Although overall supply was recovering slowly, the market was still experiencing a shortage of effective supply in the short term due to reduced production, low inventory levels, and disruptions in shipping schedules, which waws the core support for prices.

Demand side:

Operating rates at downstream compound fertilizer companies had rebounded significantly, reaching approximately 38.5% last week, a week-on-week increase of about 5.1%. This was particularly evident in northern regions, where increased end-user stocking had driven up inquiries and purchases of raw materials. Although demand support was stronger than before, prices had reached relatively high levels. Downstream factories and traders were adopting a more rational approach to purchasing, generally following a strategy of "replenishing inventory as needed and buying on dips," which limited their acceptance of continuously rising prices and created some resistance.

Market Forecast:

In summary, the potassium chloride market operated strongly last week, driven by both low inventory levels and expectations of seasonal demand. In the long term, the diversification of import sources was enhancing supply chain resilience; in the short term, the tight balance between supply and demand remained the key factor driving market trends. The market is expected to fluctuate amidst the interplay of strong fundamentals (tight supply) and cautious sentiment (due to high prices). Industry participants are advised to maintain cautious optimism, prioritize meeting essential demand, and closely monitor the flow of port inventories and policy developments.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.