The potassium market has been a scene of suspense, with prices fluctuating dramatically over the years. In 2014, when potassium chloride returned to a more rational pricing level, potassium prices surged to record highs. Today, the price gap between potassium chloride and potassium in the domestic market has surpassed 1,000 yuan, while on the international stage, the difference has reached as high as 200 euros. Industry experts suggest that the inorganic chemical sector serves as a microcosm of broader economic trends. A global economic slowdown has led to a downturn in the chemical industry, particularly affecting the production of "three acids and two alkalis," which are key chemical products. Additionally, the poor utilization of potassium byproducts has further constrained potassium production.
At the same time, the global economic climate has driven domestic potassium prices upward, and production restrictions have intensified demand for potash products in the international market. On the domestic front, nitrate-based products and high-tower projects are pushing to expand their market share, contributing to rising potassium prices. Since late 2013, several major companies have launched large-scale nitrate-based compound fertilizer projects, including Hubei Saning Chemical's 600,000-ton annual capacity project, Huaqiang Chemical's 800,000-ton facility, and Shandong Tianshan Fenghe's 200,000-ton tower nitro-based slow-release fertilizer project. Meanwhile, joint ventures involving Qingshang, Xinhua, Sichuan Golden Elephant Group, and Hebei Qiheng Group have also entered the market, increasing demand for potassium across both industries and consumers.
Most of the potassium is directly used in the production of compound fertilizers, making it an essential raw material. This has led to increased demand for potassium, even though overall fertilizer market demand has been shrinking since 2013. According to some estimates, with 40% of the production capacity of 400,000 tons of compound fertilizer and 3 tons of potassium required per ton of fertilizer, if institutions predict that potassium capacity will reach 3 million tons in 2014, the supporting capacity for compound fertilizers could approach 10 million tons. As compound fertilizers become more widespread, the market environment for them is expected to grow increasingly challenging.
The market’s growing demand for nitric acid may also pose challenges. The “hungry†potassium market has triggered a rapid expansion of production capacity, leading to full utilization of Mannheim processing facilities. In 2012, China’s total production capacity for Mannheim potassium was over 2 million tons. The supply-demand imbalance drove potassium prices up in 2014. That year, potassium sulfate consumption reached 2.865 million tons, higher than in 2013, with room for further growth in 2014.
In addition, alternative methods such as the Glauber’s salt process, meta-sulfate sodium sulfate, and ammonium sulfate are being used more frequently. Even though some non-economic processing methods are gradually being phased out, many companies are still eager to catch up with the market trend. The high price of potassium sulfate has also led to the proliferation of counterfeit and substandard products, which threaten the integrity of the potassium market. It is estimated that by the second half of 2014, new Mannheim potassium fertilizer production capacity will reach 290,000 tons annually. Lop N’s potash is expected to add 300,000 tons of annual capacity in 2015, potentially bringing mature product supply to the market. Thus, the tight supply situation is likely to persist.
Under the pressure of the potassium market frenzy, fake and low-quality products have flooded the market. Whether the current risks in the potassium sector represent a disaster or an opportunity remains unclear. It is possible that this cycle could lead to self-destruction or self-help. Looking ahead, as compound fertilizer production capacity continues to grow, the availability of potassium raw materials may struggle to keep up. One day, when people begin to recognize the dangers of structural imbalances in the market and attempt to break free from this cycle, a new round of supply shortages may emerge.
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