CICC: Global potassium fertilizer supply capacity is limited, optimistic about the industry's outlook maintaining positive.

CICC released a research report stating that the contract price for potassium fertilizer imports in 2024 will be $273 per ton CFR, which is equivalent to a domestic market price of approximately 2,300 yuan per ton including taxes. Considering the support effect of the contract price of potassium fertilizer and the gradual entry into the peak season of fertilizer use, it is optimistic about the maintenance of a prosperous potassium fertilizer price in the domestic market. With the demand for potassium fertilizer entering the peak season in the second half of the year and the signing of large contracts in China and India, while considering the limited new capacity in the medium and short term, the price and demand for potassium fertilizer are expected to remain stable. It is recommended to pay attention to domestic leading companies in potassium fertilizer stocks and companies with incremental presence overseas in the future. Global potassium fertilizer sales in 2Q24 showed a trend of price decrease and quantity increase. According to the announcement: 1)Nutrien: Demand outside North America has grown, but delayed planting season in North America has led to a decrease in sales volume, with potassium fertilizer sales of 3.6 million tons in 2Q24, up 5% year-on-year; average price of $212 per ton in 2Q24, down 29% year-on-year. 2) Mosaic: Achieved potassium fertilizer sales of 2.35 million tons in 2Q24, up 8.5% year-on-year; average price of $224 per ton, down 31% year-on-year. 3) Qinghai Salt Lake Industry: Achieved potassium fertilizer sales of 1.47 million tons in 2Q24, up 66%/93% year-on-year; average sales price of 2,383 yuan per ton in 1H24, down 18% year-on-year. 4) Asia-Potash International Investment: Achieved potassium fertilizer sales of 563,000 tons in 2Q24, up 88% quarter-on-quarter; average sales price of 1,972 yuan per ton in 1H24, down 25% year-on-year. Demand side: Crop prices in many regions are still above the average level of the past 10 years, and Nutrien has raised its annual demand forecast to 69-72 million tons. According to Nutrien's announcement, the company raised its global potassium fertilizer shipment forecast mainly considering: grain reserves are still tight, and despite the downward trend in crop prices, the company expects strong crop investment in North America in 3Q24; the profit margin of soybeans in Brazil is higher than in 2023, and a 1-3% increase in planting area will drive steady demand for fertilizers; the affordability of potassium fertilizers and the recovery of prices of palm oil and other products will drive increased demand in Southeast Asia, with a significant year-on-year increase in potassium fertilizer imports in Indonesia and Malaysia. Supply side: Russia/Belarus has basically recovered to the level of 2021, and there is limited supply and demand tightness. According to Nutrien's announcement, the annualized production of potassium fertilizer in Russia in 1H24 is expected to be around 15 million tons, which has returned to the level of 2021; the annualized production of potassium fertilizer in Belarus is expected to be around 11 million tons, with only a million tons level gap compared to 2021, indicating that the production capacity of Russia and Belarus in the short term may have already fully recovered, with limited future increments. In addition, from the perspective of new production capacity, according to incomplete statistics from CICC, the main focus of new production capacity in 2024-25 is in Laos. In the medium to short term, there is limited new production capacity for potassium fertilizer, and the industry is expected to remain prosperous. Risk factors: Potassium fertilizer demand recovery is lower than expected, and fluctuations in commodity prices affect potassium fertilizer prices.