05.07.2016, 13:37
Fitch: China's High Potash Inventory Weakens Imports and Prices
OREANDA-NEWS. Fitch Ratings expects China's potash inventory to remain high for the remainder of 2016, further decreasing imports and depressing global potash prices.
China's imports of potassium chloride, known as muriate of potash (MOP), declined by 10% yoy to 3.0 million tonnes (mt) in the first five months of 2016, with total import value dropping by 17%. The average import price was down 9% yoy to USD287 per tonne, a historical low.
Fitch believes the high inventory is primarily associated with weaker domestic demand, rising domestic output and aggressive imports over previous few years. China imported 8.0 mt of MOP in 2014 and 9.4 mt in 2015, representing growth of around 33% yoy and 17% yoy, respectively. Meanwhile, China's domestic MOP output in 2015 rose by 8.6% yoy to around 9.5 mt. We expect China's domestic production to remain high, as the Chinese government has a target of achieving 70% self-sufficiency in potash fertiliser production by 2020, compared with around 60% now.
China is the largest potash consumer in the world, with demand of around 15.8 mt in 2015, accounting for 27% of global demand. This means significant changes in Chinese imports affect global potash prices.
Delayed signing of contracts between China and North America's potash cartel, Canpotex Limited, reflects the downside risk of potash prices, China's high domestic inventory and intense competition from suppliers in Russia and Israel.
China's imports of potassium chloride, known as muriate of potash (MOP), declined by 10% yoy to 3.0 million tonnes (mt) in the first five months of 2016, with total import value dropping by 17%. The average import price was down 9% yoy to USD287 per tonne, a historical low.
Fitch believes the high inventory is primarily associated with weaker domestic demand, rising domestic output and aggressive imports over previous few years. China imported 8.0 mt of MOP in 2014 and 9.4 mt in 2015, representing growth of around 33% yoy and 17% yoy, respectively. Meanwhile, China's domestic MOP output in 2015 rose by 8.6% yoy to around 9.5 mt. We expect China's domestic production to remain high, as the Chinese government has a target of achieving 70% self-sufficiency in potash fertiliser production by 2020, compared with around 60% now.
China is the largest potash consumer in the world, with demand of around 15.8 mt in 2015, accounting for 27% of global demand. This means significant changes in Chinese imports affect global potash prices.
Delayed signing of contracts between China and North America's potash cartel, Canpotex Limited, reflects the downside risk of potash prices, China's high domestic inventory and intense competition from suppliers in Russia and Israel.
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