The Outlook Potash is part of the extensive Fertilizer coverage and is published quarterly. This up-to-date and reliable report gives overviews, key price drivers and forecasts, demand and supply outlooks as well as any shipping movements and other key influencing factors affecting the market at the time. Both the short-term activity and longer 12 month reviews can help you to make those important commercial choices. The Outlook reports are produced by Intefer Research on behalf of ICIS.
Updated to Q4 2018
With the settlement of the China and India long-term supply contracts, the southeast Asian MOP market has been given fresh price direction. However, the settlements also mean supply to the region will remain tight for Q4, as producers attempt to balance the demands of China and India with shipments to the rest of the world.
MOP demand in southeast Asia will likely increase in Q4, first as buyers look to beat potential offer increases, following the plus-$60/tonne settlement in China, and then as plantations restock for the next palm oil planting season. However, it is likely some buyers will be left disappointed, as supply remains tight.
European MOP supply will likely remain very tight in Q4, as curtailed production in Q3 at K+S’ plants on the Werra in Germany, and the necessity of supplying India and China with contracted MOP shipments puts pressure on producers. New entrants to the market – including EuroChem – will continue to use the period of relative quiet to cherry-pick selling opportunities.
Q4 demand will tick up in Europe, as farmers return to the market to restock ahead of spring. Steady SOP production will also continue to draw MOP away for Mannheim production. Demand will likely outstrip supply, putting bullish pressure on offers.
Updated to Q3 2018
The market could currently best be described as uncomfortably inactive. With no clear price direction yet heard for either China or India long-term import contracts, buyers appear uninterested. Supply to Asia is thus steady. However, once China or India settles, demand will spike and produces are likely to send more to the region.
Once China and India contract prices settle, demand in Asia will likely spike abruptly. Although an increase is expected across the MOP complex, the degree of the hike will have enormous influence on Asian demand in Q3 – especially if buyers find China has settled $5-10/tonne below their regional market level.
The third quarter is traditionally a quieter period for the European potash market, as farmers look to the harvest, and distributors attempt to empty warehouses. Supply will likely be steady as a result, with little in the way of disruption. This low season may also lend some of the market’s newer players – such as EuroChem – time to broaden their customer network.
Q3 demand will be light for MOP in Europe, as farmers see to their crops. An increase in SOP production may buck the trend for enquiries, however, as there is talk of Latin America and southern Europe requiring an increased proportion of the high-quality crop nutrient. As a result, raw MOP demand may see a slight uptick.
It is anticipated that during the upcoming quarter that overall supply levels will increase. Additional imports are set to be arriving over the period. The US market is seen as more attractive to those volumes given the steady appreciation in the US barge and terminal values.
During the upcoming quarter, demand will get a boost as restocking of the volumes that were utilised for the spring crops will begin to come forth. The outlook right now is that restocking interests will be a tad stronger than previously seen, which could spark the market and leave demand outpacing supply.
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Potash or Potassium (K) is the seventh most common naturally-occurring element in nature, and it is one of the three main macronutrients required for plants…
While the word “potash” is used to describe all potassium (K) based products, it most commonly refers to MOP.
Muriate of potash (MOP) or potassium chloride (KCl) can be mined directly from strata of evaporated sea beds (in Canada, Russia) or from evaporation ponds using solar energy (companies in Israel/Jordan mine from the Dead Sea) or solution-mined, which is a more expensive evaporation process but is becoming popular with newer players.
Potash comes in colours ranging from white to cream to red/light pink, depending on the mining and recovery process used.
Standard MOP is widely traded (biggest import for India and China), while granular MOP is a premium product preferred for direct application and NPK production in countries using advanced soil fertilization methods (like Brazil, Europe).
Potash is a producer-driven industry as there are only a few natural deposits located across the world, in Russia, Belarus, Canada, Israel/Jordan, and Germany. Smaller deposits are located in China, the US, the UK, Thailand (undeveloped) and there are several exploration projects being pursued in the Amazon Basin, the Congo, Ethiopia/Eritrea and the US.
Essentially, competition is limited and the industry operates more like an oligopoly where producers fix prices and cut production whenever demand softens. However, the market is slowly starting to free up since Uralkali exited its marketing joint venture (BPC) in July 2013.
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