Affected by the social turmoil triggered by the Belarusian presidential election, some key enterprises related to the lifeline of the Belarusian economy have successively announced the suspension of production and production, including the world’s two largest potash fertilizer cartels (Cartels mainly refer to monopoly interest groups, monopoly alliances, and enterprise alliances). , The industry alliance is one of the forms of monopoly organization.) Belarusian Potash Company (hereinafter referred to as BPC).
It is reported that BPC has partially suspended work and production since August 17, waiting for the improvement of the domestic situation. From the BPC website, the company has not yet clearly stated when it will end the shutdown.
BPC, Nutrien of Canada, Uralkali of Russia, and Mosaic of the United States are the world's four major potash fertilizer suppliers. About 70% of the world's potash fertilizer comes from these four giants. Among them, the potash fertilizer produced by BPC accounts for about 20% of the global potash fertilizer supply.
BPC was established in 1970. The current annual potash production capacity is between 12.7 million tons and 12.9 million tons, and it is planned to increase to 15.9 million tons in 2025.
The main buyers of BPC include China, India, etc. The supply contracts signed with the two countries are also regarded as the benchmark of the potash fertilizer market. According to data from the Ministry of Commerce, my country imported 1.87 million tons of Belarusian potassium chloride in 2019, second only to Canada and Russia.
Facing the current situation, on August 17, the BPC website released the "Report to Partners":
Today the whole world is paying attention to Belarus. Belarus Potash Company is well aware of the importance of its commitment to you and its responsibilities to you, and hope to gain your understanding of us. Belarus Potash Company will do its best to fulfill all signed contracts. We are open to all partners, and you can contact us around the clock. The Belarusian Potash Company hopes to end the current situation as soon as possible, and please join us in praying for peace and prosperity in the Republic of Belarus.
"Since 2018, the spot price of potash fertilizer has fallen severely. Suppliers hope to stabilize the weak spot price and tighten global product supply. Whether the sudden situation in Belarus can change the long-term trend of potash fertilizer prices will still depend on the downtime. As long as several weeks, it will have a significant impact on the market.” CRU senior potash analyst Humphrey Knight said.
However, the suspension of BPC may have limited impact on the price of China's potash fertilizer market.
Potassium fertilizers exported by BPC to China are mostly white potassium, and 62% white potassium is the main raw material for downstream potassium sulfate enterprises to produce high-end water-soluble products.
On the demand side, 62% of China's imports of white potassium are mainly used for the production of potassium sulfate products, which are then exported to the Southeast Asian market. In the second half of the year, the export orders of Chinese potassium sulfate manufacturers decreased, so the import demand for 62% white potassium was not strong.
Judging from the sales of downstream compound fertilizer plants, autumn fertilizer sales are also relatively general, and subsequent demand support is limited.
On the supply side, Qinghai Salt Lake Industry Co., Ltd., China's largest potash fertilizer producer, may upgrade its products to achieve 62% mass production of white potassium, which will weaken the impact of BPC’s “out of stock” on the domestic market.
In terms of inventory, the domestic potash fertilizer supply has been surplus for a long time. In 2019, due to high inventory pressure, China also suspended the signing of potash fertilizer contracts with BPC. In recent years, China has carried over a large amount of potash fertilizer inventory, and the market is still in the stage of inventory digestion.
Therefore, overall, although BPC is the world's major potash fertilizer supplier, its temporary suspension of production has relatively limited impact on the Chinese market. However, if the production stoppage lasts for too long, market sentiment may be stimulated, which may also drive prices up temporarily.
