Through negotiations, in 2010 China received a potash import price of US$350, which was the world’s lowest price for potash imports. The picture shows the port of Lianyungang workers are loading and unloading the first ship of potash fertilizer that year. (photo by Yu Wendong)
Sinochem New Network News Recently, the chief representative of Beijing Potash Fertilizer Corporation (BPC) Beijing Representative Office, which imports important potash fertilizers from China, is exporting wind power. It is expected that in 2012 China will carry out relevant negotiations on potash fertilizer imports in 2012. For the 2012 contract negotiation price, Si Yuangong stated that the highest quotation of potassium chloride on the international market has reached US$570 (t price, the same below), the mainstream price in Europe is US$530, and the latest contract price in India is also 530 In dollar terms, BPC's offer to China must not be lower than India's.
It is understood that the import price of potash fertilizer in China from 242 US dollars in 2007 to 350 US dollars in 2010, to 400 US dollars in the first half of this year, and then to 470 US dollars in the second half, soaring. Before each negotiation, China made a determination not to accept the gesture, but it still could not stop rising prices. If the import price rises further to 530 US dollars next year, it means that the rate of increase will reach more than 12% and reach a record high. Faced with such astronomical price, will China accept it?
The bottom line of rejection: Business farmers cannot accept that many people in the industry believe that China will not accept this price.
Feng Mingwei, deputy general manager of Sinochem Fertilizer Co., Ltd., said that China is a potassium-deficient country, but in recent years, the Chinese potash fertilizer industry has developed rapidly. At present, the production of potash fertilizer in Qinghai and Xinjiang has already supported half of the potash fertilizer demand in China. It is expected that the total amount of domestic potash fertilizer this year will reach 4.5 million tons (100% potassium oxide, the same below). It is precisely because of the rapid rise of China's potash fertilizer industry that the external dependence of potash fertilizer in China has dropped from 90% 10 years ago to the current 50% to 60%. China has more and more right to speak in the negotiations.
"As far as the import and export companies are concerned, if the import price is too high, we will face losses. In 2008, the price of imported potash fertilizer was high, and we lost 1.44 billion yuan. The high price of 530 US dollars is difficult to accept anyway." Feng Mingwei said.
According to Zhao Siyi, president of Sichuan New Century Group, there are currently 78 or more companies in China looking for potassium overseas, and some of them have been exploring for the past few years and have the conditions for development. By the next year, 800,000 tons of output can be formed. “Our project in Laos is divided into three phases, and 500,000 tons under construction will be put into operation next year. By 2016, the production capacity of Kaiyuan's Laos project will reach 3 million tons. These all increase the negotiating capacity of the Chinese potash industry, so we may not accept it. This price," said Zhao Sijun.
Li Hongxiang, executive general manager of Shandong Shikefeng Fertilizer Co., Ltd., said that as a compound fertilizer producer, if the import price of potash is too high next year, companies will reduce their consumption. Because if the price increase dealer can not accept, the farmers can not accept it. "At the time of the financial crisis in 2008, because the price of potash rose too fast, many pre-ordered contracts for compound fertilizer companies destroyed orders, making us very passive." Li Hongxiang said.
Jia Qibin, general manager of Guizhou Xiyang Fertilizer Industry Co., Ltd., also stated that when the retail price of 45% (15 nutrients for N, P, and K fertilizers) is more than 3,750 yuan/ton, farmers will find it difficult to accept them. Enterprises in the production of compound fertilizer products, have to adjust the ratio according to the price of raw materials. If the raw material price is too high, the market does not accept it, and companies can only consider reducing production.
Zhang Guimin, director of sales and marketing in China for SQM (Beijing) Trading Co., Ltd., explained that the price of US$530 was unacceptable from the domestic farmers' affordability. He said that although the price of potash fertilizer in China is a lowland price for potash fertilizer in the world in terms of import prices, from the perspective of potash fertilizer obtained by end consumers, the price of potash fertilizer in China is basically the same as international prices even higher than international prices. Take Europe for example, at present, the price of potassium for potash in Europe is 530 US dollars, or about 3,392 yuan, and the current Chinese port has sold 3,200 yuan of potassium chloride, but from the port to the hands of consumers still need to experience more As a result, when potash was put into the hands of consumers, the price was a few hundred dollars more. In Europe, although the arrival price is higher than China's, but because local farming patterns are large farms, the added cost from the port to consumers is only about 5%, so the price of potash used by European consumers is even lower than in China. Looking back at India, although India may have higher potash prices than China, the Indian government has a corresponding subsidy, so the cost of potash used by farmers will not be too high. While China is a small-scale peasant economy, the farmer’s agricultural product prices are very low. If the price of potash is too high, it will inevitably affect their purchasing power and thus reduce the amount of potash.
The bottom line: The self-sufficiency ratio is too low. There are also gaps in the industry. Some industry insiders believe that in order to ensure China’s grain harvest, China may have to accept it.
Zhao Siwei analyzed that at present, the global reserves of potassium salt ore have been estimated to be about 10 billion tons, but its resources have been unevenly distributed. Canada, Russia, Belarus, and Brazil’s four major countries account for more than 90% of the world’s total reserves of potassium, while China’s reserves of potassium minerals account for only 2.2% of the world’s total. This year, the total amount of domestic potash fertilizer can reach 4.5 million tons, but in the face of domestic demand for 10 million tons of potash, it also appears to be stretched. Although domestic companies may find overseas potash to make up for their domestic deficiencies, so many companies have only just acquired exploration rights after going out. It takes a long period of exploration to discover whether there is any potassium, and then conduct a series of work such as feasibility studies and environmental assessments. There are products coming out. In general, it takes 8 to 10 years to achieve the target output, and it may not be possible until 8 years after the domestic supply of potash is exceeded.
Liu Xingjiang, chairman of Zhongnong Mineral Resources Exploration Co., Ltd., also stated that the construction of overseas potash fertilizer production bases has not been easy. “Although potassium salt has a good market prospect, but for Chinese companies that do not have mature transnational investment experience, there are still some uncertain risks in the overseas investment process. There are also many difficulties in the development of Laos potassium salt. In addition to geological exploration and technical difficulties, the weak infrastructure in Laos is also a major problem. “The external development conditions of the potash project in Laos are poor, and infrastructures such as transportation, materials and energy are almost all blank. Development companies need to invest a lot of infrastructure,†said Liu Xingjiang.
An expert in the agricultural sector, who declined to be named, said that China is a big country in agriculture and agriculture accounts for 11.3% of GDP. The price of agricultural products depends on the cost of agricultural machinery, fuel, and fertilizers. As long as potassium is controlled, all fertilizer prices are controlled. Because all the compound fertilizers are inseparable from potash. China's shortage of potassium arable land has accounted for 56% of the total area of ​​arable land. Due to a long period of time now and in the future, the lack of potassium resources in China is difficult to change. Potash has become one of China's seven major mineral products that are in short supply. At present, the self-sufficiency rate of potash fertilizer in China is only about 50%, and the foreign dependence is as high as 50% to 60%. From the current point of view, although the domestic potash fertilizer industry has developed rapidly, overseas potash fertilizer projects have progressed smoothly, and imported potash fertilizers have fought for prices at low prices, from the perspective of resource security, domestic supply can be guaranteed. However, the ratio of nitrogen, phosphorus, and potassium used in China's land proposed by the Ministry of Agriculture is 1:0.4:0.3. Based on this proportion of soil testing formula, China's potash consumption should reach 20 million tons, but this year's potash consumption is less than 1,000. Ten thousand tons, far less than the Ministry of Agriculture proposed nitrogen, phosphorus, potassium application indicators. Therefore, in order to ensure a good harvest, even if the imported potash price is 530 US dollars next year, China will still have to import it.
Li Lijuan, a researcher at the Qinghai Salt Lake Institute of the Chinese Academy of Sciences, told reporters that although China’s current potash fertilizer output has reached 4 million to 5 million tons per year after a new round of capacity expansion, it has basically reached the maximum capacity limit, but it is at least 10 million tons compared to the domestic year. In terms of demand, there is still a large gap, only relying on imports. In 2007, the total import volume was 9,143,500 tons, which was a year-on-year increase of 33.47%, reaching the highest peak of China's potash fertilizer import history. Even if global potash prices skyrocketed, supply was insufficient, and the total amount of large contracts fell in 2008, the total amount of potassium chloride imported from China reached 5.142 million tons. At that time, China's imported potash price reached a maximum of 650 US dollars and the average price also reached 550 US dollars. . Potash fertilizer is one of the fertilizers that must be used for food production. People in China, a country with relatively poor potash resources, often associate potassium with food security. Therefore, even if the price of imported potash exceeds 530 US dollars next year, China will have to accept it.
The third possibility: The other party sees the situation. The industry believes that there is a third possibility. The other side will step back and talk about a price acceptable to both parties.
Zhao Zhaoying, executive deputy secretary general of the Potassium Salt (Fertilizer) Branch of the China Inorganic Salt Industry Association, told reporters that there are many more cards that can be played in China. The first is that China and India have different national conditions. India itself does not have potash production capacity, so it has basically no say in import prices. China has a large potash production capacity, which is a very favorable weight for China in the import negotiations. International sellers are also aware that China has consistently accepted prices lower than India. Second, the Indian government has consistently provided high subsidies for the import of potash, while the Chinese government has not directly subsidized the import of potash, and the high market price of potash fertilizers has dropped sharply. Foreign buyers should not forget the lesson that China did not advance to boycott the international potash fertilizer price of one ton of potash fertilizer in 2009. The third is the recent news from China that is favorable to China. The capacity of the four potash producers outside the Potash Export Consortium (Canpotex) in Canada has expanded rapidly. They are now very wealthy and their sales of potash fertilizer are mainly in China. . Recently they negotiated with a potash delegation in China, and offered to open up the Chinese market at a low price of US$230. Fourth, China has achieved a major breakthrough in the production of insoluble potash fertilizers with abundant resources. Therefore, foreign sellers will not consider these factors in China.
Bai Yuan, the chief representative of Beijing Potash Corp. in Beijing, also admitted that due to the financial crisis and the European debt crisis, the entire international economic situation is not good, and this background certainly will affect all industries. China's potash fertilizer production has gradually increased, resulting in a reduction in imports. For this reason, international traders have to accept this fact. If we talk about China with US$530 as a price parameter, China will certainly not accept it. Another person from the international potash supplier Arab Potash Corp. has stated that although there is no exact quotation, he expects the price of potash supplied to China next year should be around $510.
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