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Potash Demand Growth in Key Regions Could Impact Prices

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Potash

Potash fertilizer prices have seen an improvement this year as a result of stronger global demand. The demand was driven by customers who pushed back their purchases in 2016. As customers’ inventory ran dry, the market demand for potash gained momentum this year. It was evident in PotashCorp’s (POT) September 2017 market overview. The company said, “Potash deliveries were strong during the first half of 2017.”

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Impact on prices

Potash prices have bounced back stronger this year. Granular potash prices in Brazil have risen as much as 17% YoY (year-over-year) to $274 as of the week ending October 6. In the US Cornbelt region, prices have risen ~5% YoY. The standard grade of potash was also 5% higher YoY in the South East Asia region.

Tighter supply

The minable deposits of potash salt, which is a key raw material for potash fertilizers, are rare. Unlike the nitrogen fertilizer supply, the potash supply side is more concentrated with a large amount of production capacity among a handful of players (MOO) including PotashCorp, Mosaic (MOS), Agrium (AGU), Israel Chemicals (ICL), Uralkali, and Belaruskali.

Demand growth

According to PotashCorp, the demand for potash and the strength in global demand will continue this year. It’s expected to be 62 million–65 million tons in 2017, which will be up from ~60 million tons in 2016.

Among the key agricultural markets, Brazil remains a bright spot for potash fertilizer producers. Increased acreage has driven potash fertilizer consumption. China is expected to have record potash consumption in 2017 at 15.8 million metric tons. Potash consumption is also expected to grow YoY in India and other Asian markets.

In the next part, we’ll discuss nitrogen fertilizers.

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