Potash Supply Recovery and Gradual Production Cuts.
Global Potash Supply Rebounds
With Russia and Belarus ramping up potash exports to Asia and South America, the global potash supply is beginning to stabilize. Production cuts have been implemented to avoid oversupply. This year, global potash production is expected to reach 73 million tons, with Russia exporting 12-13 million tons and Belarus around 10 million tons. After a period of price fluctuations, potash prices have gradually returned to normal.
Increase in Exports from Other Countries
Potash exports from Canada, Jordan, and Laos have also boosted global supply, lowering prices and raising concerns about a potential oversupply. Potash demand is anticipated to improve slightly by 2025.
Declining Potash Prices Boost Crop Affordability
Delphine Leconte-Demarsy, a fertilizer advisor for the United Nations Food and Agriculture Organization, notes that falling potash prices have increased the affordability of certain grains and oilseeds:
In the United States, potash prices remain higher than pre-increase levels, yet elevated crop prices are offsetting the costs. However, the impact on farmers varies depending on logistical costs and exchange rates.
In China, potash prices are currently lower than pre-increase wheat and corn prices, but weak rice markets are limiting potash usage for this crop.
In Brazil, potash prices have returned to 2019 levels, encouraging its use on high-value crops like soybeans and corn.
According to Rabobank analyst Paul Joules, farmers will continue to benefit as tight market conditions are expected to keep potash prices below historical averages.
Summary of China’s Q3 Import and Export Data: Energy, Grain, and Fertilizer Trade.
Dynamics Overview of Imports and Exports
In the first three quarters of this year, China's total imports and exports reached 32.33 trillion RMB, up 5.3% year-on-year, breaking the 32 trillion RMB threshold for the first time.
Energy and Grain Imports
In September, China imported 47.59 million tons of coal, a year-on-year increase of 12.9%, and 11.99 million tons of natural gas, up 18.1%. Grain imports totaled 14.13 million tons, up 24.9%, with soybean imports at 11.37 million tons, up 59%. Fertilizer imports stood at 1.3 million tons, up 13% from September last year; cumulative fertilizer imports from January to September were 10.38 million tons, up 12.2% year-on-year. The substantial increase in potash imports is putting downward pressure on domestic potash prices.
Fertilizer Exports In September, China exported 3.24 million tons of fertilizers, a year-on-year decrease of 14% and a month-on-month decrease of 19.8%. From January to September, cumulative exports were 22.95 million tons, up 1.3% year-on-year. Despite a significant increase in ammonium sulfate exports, urea exports dropped significantly, resulting in a considerable year-on-year decline in overall nutrient export volume.
Expansion of Indonesian Rice Fields Drives Fertilizer Demand Growth.
Indonesia Plans to Expand Rice Fields
The Indonesian government is set to develop approximately 3 million hectares of new rice fields starting next year, a move expected to increase domestic fertilizer demand by 2025. The first phase will involve developing about 1 million hectares in the Marauke region of West Papua Province, generating a local demand of around 500,000 tons of urea and compound fertilizers annually.
New Production Facilities to Meet Demand
Pupuk Indonesia is currently building a granulated urea plant with a production capacity of 1 million tons per year in Fakfak Regency, West Papua, scheduled for completion in 2028 to address the demand surge from expanded rice planting. Additionally, the group plans to construct a 400,000-ton granular urea plant in Palembang to replace an older facility, with operations anticipated to begin in 2025.
Government Fertilizer Subsidies to Support Farmers
The Indonesian government allocates approximately 250 trillion Indonesian Rupiah (about USD 1.6 billion) annually to assist farmers in accessing affordable fertilizers. This year, fertilizer subsidies increased by around 140 trillion Rupiah, benefitting a larger number of farmers. For 2024, about 9.55 million tons of subsidized fertilizers are projected to be distributed, comprising 4.63 million tons of urea, 4.42 million tons of compound fertilizer, and 500,000 tons of organic fertilizer. Subsidized fertilizer distribution across regions has also increased, with West Java, Central Java, East Java, South Sulawesi, and Lampung receiving 1.21 million tons, 1.51 million tons, 1.92 million tons, 798,200 tons, and 803,700 tons, respectively.
Domestic Fertilizer Production and Export Impact
Pupuk Indonesia’s current fertilizer production capacity exceeds 14.6 million tons per year. Rising domestic demand for urea and compound fertilizers may lead to a decrease in Indonesia’s fertilizer exports by 2025 as more production is directed toward meeting domestic market needs.
Attention: The above information is for commercial reference only due to the diversity of information collected, and Kelewell is not responsible for the authenticity of the data.
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