K + S & Co .: Hopes of a strong price recovery for potassium chloride are fading – Commerzbank column

The prices for potassium chloride (used in the fertilizer industry) have been weak for years. Although four potash producers (Belaruskali, Nutrien, Uralkali, Mosaic) approx. control two thirds of global supply because they have not been able to adapt their production sufficiently to lower demand. For 2020, global potash production will increase to approx. 66 million t is estimated (global utilization rate: around 70-75%), 66-68 million t are expected in 2021. Compared with the last price high in 2009 (around 680 USD / kg, standard quality, FOB Vancouver, i.e. excluding freight and insurance), the potash price was recently just over 200 USD / kg. Hopes that had emerged in the meantime that strikes in the Belaruskali potash mines would lead to supply shortages and thus to price increases have not been fulfilled. On the one hand, low grain prices (especially corn and soybeans) speak against a radical price recovery for potassium chloride. On the other hand, the potash stocks in China (largest potash importer, ahead of India) are approx. 3.4 million t very high. In addition, further capacities are likely to come onto the market in the medium term (ramp-up of the Canadian potash mine from K + S: capacity of 2.9 million t / year, final approval of the Jansen project by BHP is to take place in 2021: capacity of 4 million t / Year). Most recently, K + S reported that it lowered its long-term potash price assumptions, as a result of which high value adjustments on potash assets in the group had to be made at the expense of the third quarter. In view of the high net debt of K + S, this balance sheet adjustment would certainly have been avoided. This step therefore indicates that the company does not expect any appreciable recovery in potash prices in the foreseeable future either.


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