In 2023, there is a huge gap in the supply of potash, and the supply cut-off has caused the cost of leading potash companies to rise by more than 80%!
Potash production in Russia
According to Rosstat, the Russian statistics agency, the production of mineral fertilizers by Russian producers in February 2023 was 1.9 million tons. Compared to February last year, it was down by 9.6%. A total of 4 million tons of fertilizers were produced in the first two months of the year, 10.2% less than in the same period of 2022, including 1.1 million tons of potash, which is 35.6% lower compared to the same period of 2022. Representatives of the Russian Association of Fertilizer Producers (RAPU) explained that the low demand for mineral fertilizers in Russian agriculture and sanctions led to a decrease in exports.
Potash supply gap
The geopolitical landscape has long-term implications for potash supply.
In February the EU announced a one-year prolongation of sanctions against Belarus until February 2024. Russia's potash production even further down compared to 2022, the impact of the Russia-Ukraine conflict in particular, even after the end of the conflict, Russia is expected to face long-term international sanctions, and it is difficult to change its impact by the dollar settlement, financial insurance, logistics and transportation sanctions.
As a result, Canadian potash company Nutrien forecasts that potash shipments are expected to fall by 40% to 60% in Belarus and by 15% to 30% in Russia in 2023 compared to 2021. The potash supply gap will be about 7-11 million tons.
At the same time, due to the long-term reduction of production and phased shutdown of production, even if the impact of the conflict and sanctions is eliminated, Belarusian potassium and Russian potassium want to return to full production capacity and export volume before the conflict between Russia and Ukraine and it will take some time in the future to maintain and repair production equipment, replenish labor and repair transportation facilities.
The supply of potash fertilizer has a significant impact on the global potash fertilizer market
Recently, Migao Group Holdings Co., Ltd., a leader in potash fertilizers, submitted a prospectus to the Hong Kong Stock Exchange. In terms of potash fertilizer sales volume, Migao Group is one of the largest potash fertilizer companies in China in 2021. The cut-off of major suppliers has caused costs to rise by more than 80%.
Migao Group mainly relies on potassium chloride producers in Russia and Belarus to supply potassium chloride. Migao Group’s total overseas potassium chloride purchases from Belarusian supplier D and domestic potassium chloride purchases from Belarus They accounted for approximately 62.8%, 26.2%, 29.7% and 0.5% of the company's total potassium chloride purchases respectively.
In 2021, Belarus and Russia have been the subject of numerous international sanctions imposed by the United States and other Western countries. In August, the US began imposing sanctions on Belarusian manufacturers, classifying them as Specially Designated Nationals. In December of the same year, the Mico Group procured goods directly from supplier D for the last time.
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