SunSirs: With Demand Cooling, Potassium Chloride Prices Pulled Back from Highs

Price trend

As of July 6, the benchmark price for imported potassium chloride stood at 3,566.67 RMB/ton, marking a 0.46% decline for the month compared to the 3,583.33 RMB/ton recorded in early July. Prices fluctuated upward from June 24 through early July, with the 10-day moving average steadily rising as prices climbed to a high range; however, market conditions shifted from stability to a decline during the first ten days of July, resulting in a slight price pullback and ending the previous upward trend.

Fundamental drivers

1. Weakening international cost support: International potash prices have softened slightly, and the landed cost of imports has declined; with ample supplies of potassium chloride circulating at ports, cost support has weakened.

2. Domestic demand entering the off-season: The primary phase of field fertilization has largely concluded, and operating rates among downstream compound fertilizer producers have dropped, with purchasing limited to essential restocking needs. Market demand has weakened significantly; this lack of demand support is the primary factor causing prices to stop rising and retreat. Port inventories are accumulating, traders are more willing to sell, and the availability of some low-priced stock is driving down overall market prices.

Market outlook

In the short term, the potassium chloride market has entered a phase of correction from recent highs; upward momentum has waned, the spread between different grades continues to narrow, and the market is consolidating within a tight, slightly bearish range. This is merely a minor pullback driven by the off-season; a significant market rebound is unlikely until stockpiling for autumn fertilizers begins.

From a medium- to long-term perspective, import costs under major contracts provide a floor for prices, preventing any sharp decline. Prices are expected to regain support between mid-to-late July and August as downstream demand recovers and stockpiling for autumn fertilizers gradually gets underway.

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