Guosen: Potassium chloride demand and prices for 2026 are expected to exceed expectations. We recommend paying attention to the leading company Asia-Potash International Investment (000893.SZ).

Guosen released a research report stating that recently, domestic potassium fertilizer prices have risen by 50-100 yuan/ton compared to the beginning of the year. Currently, domestically produced 60% white potassium is priced at 3300 yuan/ton, border trade 62% white potassium at 3400 yuan/ton, and port 62% white potassium at 3500 yuan/ton. There is a tight supply and demand situation for potassium fertilizers globally, and the industry is expected to be highly prosperous in the next 2-3 years. The bank believes that potassium chloride demand is likely to further substitute for nitrogen/phosphorus fertilizers on the basis of 2%-3%. Since 2024, China, India, and Brazil have shown strong demand for potassium fertilizers, and current inventories are low, indicating that global potassium fertilizer prices still have room for significant increases. It is recommended to pay attention to the potassium fertilizer industry leader Asia-Potash International Investment (000893.SZ). Guosen's main points are as follows: Low domestic potassium fertilizer inventory, bullish on spring farming potassium fertilizer price increase According to Baichuan Yingfu data, China's total production of potassium chloride in 2025 is 5.82 million tons, a year-on-year decrease of 380,000 tons (-6%); as of January 15, domestic potassium chloride port inventory is 2.51 million tons, an increase of 30,000 tons compared to last month, a decrease of 450,000 tons year-on-year, and national reserves still need 1.5 million tons for stock replenishment. By the end of November 2025, the annual potassium fertilizer "big contract" in China was priced at $348/ton, an increase of $2/ton year-on-year, mainly due to the pressure of ensuring supply for spring farming, and the signing time was significantly earlier than in previous years. Currently, domestically produced 60% white potassium is priced at 3300 yuan/ton, border trade 62% white potassium at 3400 yuan/ton, and port 62% white potassium at 3500 yuan/ton, with an increase of 50-100 yuan/ton compared to the beginning of the year. With spring farming consumption accounting for about 50% of the annual total and inventory at a low level, the bank is optimistic about the unexpected increase in spring farming potassium fertilizer prices. Global potassium fertilizer supply and demand are tight, bullish on the industry's high prosperity in the next 2-3 years According to General Administration of Customs data, China imported 1.46 million tons of potassium chloride in December, an increase of 3% year-on-year and 15% month-on-month. A total of 12.61 million tons were imported in 2025, remaining the same year-on-year. On the overseas front, Canpotex's 26Q1 orders have been sold out, and the recent Indonesian 26Q2 bidding prices are between $400-408/ton (CFR). In terms of supply, there will be no new capacity additions in 2025, with only Asia-Potash International Investment's 2 million tons + Belarus' Nezhinsky mine's 1 million tons capacity additions in 2026-2027. The supply-side CAGR is around 2%. Canada's BHP potash mine Jansen Phase I project capital expenditure has increased by $1 billion to $8.4 billion, an increase of 47% from the approved amount, and it is expected to release capacity by 2028 with an optimistic outlook. The marginal cost of new production in Belarus and Canada is above $250/ton FOB, providing strong support from the cost side. The global fertilizer market has entered a phase of high prices and tight balance, with disruptions in overseas nitrogen and phosphate fertilizer supplies causing price centers to rise. Potassium fertilizer has a high cost-effectiveness and demand is expected to exceed expectations Regarding nitrogen fertilizer, due to the impact of Iran/Middle East geopolitical risks, the current FOB prices for granular urea in the Middle East are between $420-430/ton, and in Brazil and Southeast Asia, the CFR prices for urea are between $430-440/ton. China will not lift urea exports during the spring farming period, and global urea prices have entered a new high price platform. As for phosphate fertilizer, China's sulfuric acid exports were halved from January to April, which increased global phosphate fertilizer production costs. Phosphate fertilizer exports were suspended from January to August, reducing global phosphate fertilizer supply, leading to an increase of about $40/ton in Brazil's MAP prices since the beginning of the year, with current CFR prices for Brazil's MAP and DAP at $680-700/ton. Against the background of a substantial rise in sulfur/sulfuric acid costs, phosphate fertilizer prices are solid. As for potassium fertilizers, current CFR prices in Brazil and Southeast Asia are between $360-380/ton, showing outstanding cost-effectiveness compared to nitrogen and phosphate fertilizers. The bank believes that potassium chloride demand is likely to further substitute for nitrogen/phosphorus fertilizers on the basis of 2%-3%. Since 2024, China, India, and Brazil have shown strong demand for potassium fertilizers, and current inventories are low, indicating that global potassium fertilizer prices still have significant room for increases. Risk Factors: Changes in international policies; fluctuations in potassium fertilizer product prices; substantial increases in global potassium fertilizer production; lower-than-expected downstream demand for potassium fertilizers, etc.