As we enter mid-March, the critical period for spring planting preparations, all related tasks are progressing in an orderly manner. Under the guidance of robust domestic policies aimed at securing supply and stabilising prices, the domestic potash fertilizer market has maintained overall stability. Prices for key products have largely remained steady with limited fluctuations, effectively ensuring a stable supply of agricultural inputs for spring planting.

The domestic potash market's fundamental supply remains robust, laying the groundwork for stable market operations. From the production perspective, domestic potash facilities maintain steady operation. Policy regulation serves as a stabilising influence. To safeguard spring fertilizer needs, major potash producers have consistently increased market supply since March, particularly targeting grain-producing regions like Northeast China. This has effectively boosted market circulation and alleviated earlier structural shortages in certain localities. The nation's robust commercial reserve and regulatory mechanisms possess the capacity to ensure uninterrupted fertilizer supply without shortages or disruptions.

Potassium Chloride Market:

High Costs versus Robust Demand

The potash market is currently influenced by multiple factors: international cost pass-through, domestic supply constraints, and the release of spring planting demand.

Regarding costs and external markets, geopolitical conflicts in the Middle East have introduced uncertainty into the global potash supply chain. While their direct impact on China's import volumes remains limited, they have heightened expectations of intensified competition for international supplies, indirectly supporting import costs. In the border trade market, sustained arrivals via China-Europe freight trains and land ports have seen slight softening in 62% Russian-Belarusian potash prices. Ex-warehouse prices have dipped by RMB 30/tonne, with current mainstream prices ranging between RMB 3,380-3,400/tonne. This offers marginal incremental supply expectations for the domestic market but has not reversed the overall tight supply pattern.

From the demand perspective, the downstream compound fertilizer industry is currently in the critical spring production period. This week saw a marked recovery in compound fertilizer plant operating rates, reaching approximately 38.9% – a substantial increase of around 15.2 percentage points from last week. Spring production of high-nitrogen fertilizers is generating stable demand for potassium chloride.

Overall, the potash market remains supported by fundamentals of low inventories and constrained distribution, maintaining elevated price levels. While key producers have alleviated regional shortages by supplying the Northeast, the nationwide pattern of tight distribution remains unchanged. Market expectations suggest that in the near term, potash prices will primarily fluctuate at elevated levels, constrained by cost support, policy expectations, and supply-demand dynamics, with limited scope for substantial upward or downward movement.

Potassium sulphate market:

A precarious equilibrium between high costs and weak demand

In contrast to the relative strength of the potassium chloride market, the potassium sulphate market remains mired in a stalemate of weak performance, hindered by inefficient cost pass-through.

Persistently high cost pressures remain the primary challenge for potash sulphate producers. The sustained elevated pricing of its key raw material, potassium chloride, coupled with the high cost of sulphuric acid – another core input driven by soaring sulphur costs – continues to weigh on production expenses for Mannheim process potash sulphate. Currently, the mainstream ex-factory average price for 50% grade granular potassium sulphate produced via the Mannheim process hovers around ¥3,800/tonne, while 52% grade granular products average approximately ¥4,000/tonne. Most producers operate on razor-thin margins or near cost inversion.

Yet these elevated costs struggle to be effectively passed downstream. Despite recovering compound fertilizer plant utilisation rates, downstream demand for potassium sulphate remains sluggish.

Against this backdrop, potassium sulphate prices lack upward momentum. Market prices remain weakly stable, with the average price on 9th March at RMB3,875 per tonne – a marginal increase of just RMB10 from previous levels. Resource-based potassium sulphate (such as Xinjiang Luo Potash) maintains relative stability, with the delivered price for 52% powder holding steady around RMB3,600 per tonne. A pervasive wait-and-see sentiment prevails across the market, with trading activity remaining subdued. The potash sulphate market's prospects for recovery hinge more on improvements in its own downstream demand or potential easing in potassium chloride feedstock costs.

Market Outlook:

High-Level Consolidation Amid Policy Resilience

Looking ahead, the potash market will operate within a triangular framework of spring planting demand, international variables, and domestic policy regulation, with its divergent pattern unlikely to change in the short term.

The pace of demand release remains the core driver. From mid-to-late March through April, peak fertilizer preparation for northern field crops like maize and rice will commence, further validating the rigid demand for potash from compound fertilizer production. Whether downstream compound fertilizer plants can sustainably increase operating rates to higher levels will directly determine the intensity of potash demand.

Supply-side variables warrant continued attention. Domestic potash producers' operating rates are expected to gradually recover from current lows. The arrival of imported potash shipments and the throughput pace at border trade ports will influence the replenishment of market supply. The release strategies of key enterprises and regulatory measures such as state reserve releases will serve as crucial stabilisers to mitigate abnormal market price fluctuations.

Overall, the potash market is currently undergoing a critical validation phase for its spring season outlook. Market participants are advised to closely monitor port arrivals, major producers' shipment policies, and shifts in downstream compound fertilizer manufacturers' operating rates and raw material procurement strategies amid complex and volatile market conditions.

As an integrated internet platform providing benchmark prices, on March 12, SunSirs' benchmark price for potassium sulfate was 3,840.00 RMB/ton, an increase of 2.31% compared to the beginning of the month (3,753.33 RMB/ton).

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