SunSirs: Analysis of the Supply and Demand Dynamics of the Potassium Chloride Market in 2025-2026

Key characteristics of the market in 2025: Stable in the first half of the year, rising in the second half, and operating at high levels throughout the year.

Throughout the year, prices exhibited a "staircase-like upward trend followed by a period of high-level consolidation," which can be divided into three stages:

1. Rapid price increase at the beginning of the year (January - mid-February): Prices started at approximately 2,650 RMB/ton and quickly broke through 3,300 RMB/ton in a short period. This is usually related to concentrated purchasing triggered by factors such as the start of spring planting preparations, market sentiment, and international contract negotiations.

2. Mid-year surge and peak (late May - early June): Prices experienced the strongest upward surge of the year, reaching a high of approximately 3,700 RMB/ton, a year-on-year increase of over 36%. This coincided with the eve of the peak season for fertilizer use in the summer and was likely strongly driven by external factors such as a sudden surge in international market prices, geopolitical situations in major supply regions, or tensions in maritime shipping.

3. High-level fluctuations in the second half of the year (mid-June to December): After falling from its peak, the price consistently fluctuated within the historically high range of 3,400-3,500 RMB/ton, with a slight upward trend at the end of the year. This reflects that after digesting the high prices, the market entered a stalemate under a tight supply-demand balance.

Analysis of major supply and demand influencing factors

Price fluctuations directly reflect the dynamic changes in supply and demand throughout the year:

Supply side:

High import dependence: China relies heavily on imports of potassium chloride, and the stability of supply from major international producers (such as Canada, Russia, and Belarus), contract pricing, shipping logistics, and geopolitical factors directly affect domestic arrival costs and delivery schedules. The sharp increase shown in the chart during May-June is most likely a result of the transmission of sudden events in the international market (such as production cuts by major suppliers, trade sanctions, and soaring shipping costs).

Domestic inventory levels: Port inventories act as a buffer, and their continued low levels will amplify any signs of supply shortages, driving prices up rapidly.

Demand side:

Stable demand in agriculture: As a major component of potash fertilizer, its demand is closely related to domestic grain production and the planting area of cash crops, exhibiting strong seasonality (spring planting and summer/autumn topdressing). The price increases at the beginning and middle of the year coincide perfectly with the start of the peak season for fertilizer preparation.

Compound fertilizer production pace: The operating rate of downstream compound fertilizer factories and their raw material procurement strategies (centralized inventory replenishment or purchasing as needed) will exacerbate short-term demand fluctuations in the market.

Market sentiment and policy:

Bullish expectations: When there is uncertainty in supply, the hoarding and withholding of goods by market participants (traders, distributors) will exacerbate price increases.

Supply and price stabilization policies: Control measures implemented by departments such as the National Development and Reform Commission and the All-China Federation of Supply and Marketing Cooperatives, including reserve releases and import coordination, act as a "stabilizer" when prices rise too quickly. This is one of the main reasons why prices did not continue to surge in the second half of the year and instead entered a period of high-level consolidation.

Summary

In 2025, the Chinese potassium chloride (imported) market was generally strong, with the price center significantly higher than at the beginning of the year. The driving logic is that, against the backdrop of rigid and highly seasonal domestic demand, any fluctuations (expected or actual) in international supply are quickly amplified and reflected in sharp price volatility. The price trend chart for the entire year clearly illustrates this market trajectory of "external shocks triggering rapid price increases, followed by a search for a new equilibrium at a high level." This highlights the critical importance of ensuring supply chain stability in mitigating price fluctuations and guaranteeing agricultural security in a context highly dependent on imports. Under the combined effects of low domestic production and persistent demand, the current potassium chloride market is experiencing tight supply and demand, thus maintaining strong prices.

Future market trends outlook:

Looking ahead to the entirety of 2026, some of the factors supporting the current high price levels may change. The market is expected to gradually shift from its current highly tense state to a more relaxed one, limiting upside potential and creating downward pressure on prices.

1. The expectation of tight supply will gradually ease: The biggest variable lies in the fulfillment of subsequent large contracts. With the import contracts at $348/ton beginning to be executed, it is expected that the volume of imported potash arriving at ports will steadily increase from the second quarter of 2026 onwards, and the overall market liquidity will improve significantly. This will fundamentally alleviate the current tight supply situation in the spot market.

2. The inhibitory effect of high prices on demand will continue: Current high prices have significantly increased cost pressures on the downstream compound fertilizer industry. If prices remain at extremely high levels for a prolonged period, it will further suppress farmers' willingness to purchase fertilizers, potentially leading to reduced demand or substitution, which in turn could exert downward pressure on potash prices.

3. Price Trend Forecast: In the short term, supported by the strong demand for fertilizers during the spring planting season and the current tight supply, prices are expected to remain firm, and may even experience slight fluctuations due to localized supply shortages. However, looking at the whole year of 2026, with the replenishment of the market by imported supplies, the period of tightest supply and demand is expected to pass. Domestic potassium chloride prices are expected to show a trend of "high-level fluctuations followed by a gradual and moderate decline," but the decline is expected to be limited due to support from international costs.

Overall forecast: The potassium chloride market in 2026 will be a tug-of-war between "high costs" and "strong regulation," and "rigid demand" and "price suppression." Prices are unlikely to return to the low levels of early 2025, but it will also be difficult for them to deviate significantly from the baseline range and experience a sustained unilateral surge.

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