China signed an agreement for potash！

China signed an agreement for potash, USD 307 per ton! 115 USD per ton lower than India!

China's potash buying committee has reached an agreement with international potash supplier Canada Company Canpotex for an annual import contract CFR price for potash in 2023 at USD 307 per ton, a decrease of USD 283 per ton from the previous year.

India signed a major annual potash contract on April 4 this year, with India's main potash importer IPL and Canadian potash company Canpotex signing a major annual potash contract for 2023 at CFR price of USD 422 per ton, and Russia's Ural Potash Company signing a price of USD 422 per ton. The price of Indian potash contracts in 2023 is down by USD 168 per ton compared to 2022.

Last year, both China and India had the same major contract price of USD 590 per ton. Last year China reached a major agreement back in February, a price that is not low but in line with China's expectations and its strategy to prioritize potash supply in the context of the volatile international situation.

In the first half of 2022, the global potash market reached a 10-year record high price. The highest unit price for potash in China reached $4,880 per ton. This year the price has changed significantly, with China reaching an agreement 2 months later than India, and the price is $115 per ton lower than India, which is $800 per ton cheaper at the latest exchange rate. This is very beneficial for Chinese farmers to reduce the cost of fertilizer.

Why is China so much cheaper than India when China reached an agreement two months later than India?

The market price of potash has changed a lot in these two months. In May this year, the price of potassium chloride fell from 3,400 yuan per ton at the beginning of the month to 2,850 yuan per ton at the end of the month, a drop of 16.18%. The commodity index for potassium chloride (imports) was 92.06 on May 30, down 47.27% from last year's high point and up 58.04% from the lowest point of 58.25 points on August 6, 2020.

Recently, the price of potassium chloride in China has continued to fall, with some market analysts saying that the price has reached RMB 2,700 per ton.

With the agreement price of USD 307 per ton, this year's agreement price translates into RMB 2186 per ton, which is about RMB 600 cheaper than the Chinese market price, indicating that China's potash buying committee has obtained a better price, which may also mean that professionals are more pessimistic about the price trend of potassium chloride this year. RMB 2180 per ton is the price in China in normal years, before this round of increase. The price pivot for potassium chloride was RMB 1,700-2,300 per ton.

In recent years, potash prices have been in great fluctuation, which is related to the international situation. The supply of potash has been relatively abundant for a long time, and the profits of the potash industry are not very high. Last year, the industry finally reached the breaking point, and the profits of both domestic and foreign potash companies grew rapidly.