Sealand: Global potassium fertilizer new capacity is limited and is expected to continue in the mid-term high prosperity.

Sealand released a research report stating that against the backdrop of increasing attention to population growth and food security issues, global demand for potash fertilizer is expected to steadily increase at a compound growth rate of 3.2% between 2025 and 2027. On the supply side, by the end of 2026, global new potash production capacity will be limited, and overseas major new production capacity like BHP Billiton has high per ton investment costs. Existing giant old mines are gradually entering the marginal mining stage, with increasing mining difficulty and rising mining costs. It is expected that the global potash fertilizer market will continue to be in a high prosperity phase in the medium term. Currently, China is in the offseason for fertilizer use, but with the gradual start of fall fertilizer demand and the boost of demand from international markets such as India, short-term potash fertilizer prices are expected to remain in high prosperity. Sealand's main observations are as follows: Medium-term high prosperity of potash fertilizer is expected to continue Against the backdrop of increasing attention to population growth and food security issues, global demand for potash fertilizer is expected to steadily increase at a compound growth rate of 3.2% between 2025 and 2027. On the supply side, by the end of 2026, global new potash production capacity will be limited, and overseas major new production capacity like BHP Billiton has high per ton investment costs. Existing giant old mines are gradually entering the marginal mining stage, with increasing mining difficulty and rising mining costs. It is expected that the global potash fertilizer market will continue to be in a high prosperity phase in the medium term. In the short term, on the supply side, according to the China Inorganic Salt Industry Association's public account, Russia and Belarus are expected to reduce exports by over 1.8 million tons this year. On the other hand, limited imports of potash by sea shipment, according to Longzhong Information, as of September 11, 2025, major port potash inventories were only 1.63 million tons, which is in the 3rd percentile since 2018, far lower than the 3.09 million tons in the same period of last year, indicating insufficient actual available supply. On June 12, a major contract for potash import was signed by China at $346 per ton (CFR), equivalent to approximately RMB 2,865 per ton domestically, with strong cost support. This price is only $3 lower than the major contract price with India a week before, reflecting the current global tight supply of potash fertilizer. On the demand side, China is currently in the offseason for fertilizer use, but with the gradual start of fall fertilizer demand and the boost of demand from international markets such as India, short-term potash fertilizer prices are expected to remain in high prosperity. Steady increase in demand for potash fertilizer Potash is one of the three essential nutrient elements for crop growth. Compared with nitrogen and phosphorus fertilizer, potash fertilizer has a stronger consumption elasticity. According to Nutrien data, from 2016 to 2024, global demand for potash fertilizer increased from 60 million tons to 72.5 million tons, with a CAGR of 2.4%. It is expected that in 2025, demand for potash fertilizer will continue to grow moderately at a rate of 3%. China is the main consumer of potash fertilizer, accounting for approximately 26% of global consumption. According to Baichuan Yingfu, in 2024, China's apparent consumption of potassium chloride is approximately 18.72 million tons, with a compound growth rate of about 5.5% from 2017 to 2024, higher than the global average growth rate. Limited new potash fertilizer production capacity before 2026 Potash fertilizer is a resource-monopoly industry, with global potassium resources extremely unevenly distributed in Canada, Russia, Belarus, and Laos. In 2024, global potash fertilizer production capacity was approximately 77.2 million tons, with planned production capacity of 20.61 million tons, but it is expected that by 2026, the only new production capacity will be the expansion of Asia-Potash International Investment in Laos by approximately 2 million tons. China's potash fertilizer industry has a high concentration in Qinghai province, and as of 2024, Qinghai Yanhu Industry is the largest potassium chloride producer in China, accounting for 54% of production capacity. China has a large gap in potash fertilizer, with import dependence persisting at over 50% in the long term, and rising to 67% in 2024. Investment recommendations and recommended targets Considering that the high prosperity of potash fertilizer is expected to continue in the medium term, for the first time, Sealand gives a "recommended" rating to the potash fertilizer industry. Key recommendations include Asia-Potash International Investment (000893.SZ) (steady expansion of production capacity, creating a world-class potash fertilizer enterprise), Qinghai Yanhu Industry (000792.SZ) (domestic keystone for potash fertilizer), and Qingdao East Steel Tower Stock (002545.SZ) (actively laying out potash mining resources). Risk warnings Demand for potash fertilizer is lower than expected, new potash fertilizer production capacity exceeds expectations, changes in potash fertilizer-related policies, performance of recommended targets falls short of expectations, and new production capacity construction of recommended targets falls short of expectations.