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Analysis of natural gas shortage’s impact on potash fertilizer sectorRelease_time：2021-01-13 09:37:06 Source：original
The limited gas supply and rising natural gas prices recently have caused the production of MOP and SOP to decrease in China. The producers of SOP that use Mannheim process were forced to lower their operation rates due to limited natural gas supply. Compound fertilizer enterprises’ demand for SOP decreased as they also reduced production due to the natural gas shortage. SOP producers in Shandong, Anhui and Hebei will see lower profit margin due to the rise of natural gas prices.
MOP prices of some small plants in Qinghai province rose slightly in December as some of them suspended production for overhaul. However, the overall prices in China were stable in the month. The price of Qinghai Salt Lake Industry’s 60% crystal MOP was 2,020-2,060 yuan/t. The price of 62% white MOP from Russia was 2,150-2,170 yuan/t at ports, and the price of granular MOP stood at 2,100-2,120 yuan/t.
The overall operating rate of SOP producers that adopt Mannheim process was about 70% as some enterprises in northern, eastern and central China lowered their operating rate. The ex-factory price of 52% powder SOP was mainly 2,600-2,800 yuan/t, and the prices in South China were still higher than in North China. As not many new deals were made recently, some SOP enterprises began to have some inventory, but the inventory was much lower compared to the same period last year.
On the supply side, the potash fertilizer supply is declining in China. The inventory at ports decreased slightly, and the future replenishment will be limited. The demand for potash fertilizer is not very large as compound fertilizer enterprises are operating at low rates and do not place many new orders.
To sum up, China’s potash fertilizer market will remain stable in the near future, with limited transactions and low possibility for price changes. However, the market may fluctuate when the production of domestic potash fertilizer decreases sharply in January.