Impacts of Potash Fertilizer Negotiation Result on Chemical Fertilizer Market   

On December 21st, 2009 China and Russian potash fertilizer exporter BPC concluded a contract on the potash fertilizer import in 2010. The contract volume is 1.0 million tons and the contract price is US$350 per ton (CIF China). China has considerable dependence on the imported potash fertilizers. Around 70% of demanded potash fertilizers need to be imported from abroad. Therefore the price of domestic potash fertilizers has always followed the price of imported potash fertilizers. Once the price of imported potash fertilizers is finalized, the price in the domestic market in 2010 is basically determined.
   Results of potash fertilizer import negotiation have offered a price comparison effect to nitrogenous fertilizers and phosphate fertilizers. Based on 1:6.83 exchange rate, the US$350 per ton CIF price of imported potash fertilizers can be translated to a CIF price of RMB2 390 per ton. Along with the expenses for packaging, storage, loading/unloading, short-distance transportation, inspection and tax (totaling around RMB200 per ton), the cost price of potash fertilizers at port is RMB2590 per ton. Adding the margins for importers again, the reasonable port delivery price is RMB2 700-2 800 per ton. Supposed that the average port delivery price is RMB2 750 per ton, counting on the 60% nutrient (potassium) content in potassium chloride, the nutrient price is equivalent to RMB4 583 per ton. The ex-factory price of urea is around RMB1 800 per ton today. As the nutrient (nitrogen) content of urea is 46% the nutrient price is equivalent to RMB3 913 per ton. The ex-factory price of diammonium phosphate with a nutrient (phosphorus and nitrogen) content of 64% is usually RMB2 500 per ton today and the nutrient price is equivalent to RMB3 906 per ton. The ex-factory price of monoammonium phosphate with a nutrient content of 55% is usually RMB2200 per ton and the nutrient price is equivalent to RMB4 000 per ton. As potash resources are in shortage, the price of potash fertilizers should be higher than that of nitrogenous fertilizers and phosphate fertilizers.
   Due to the existence of price comparison effect, after the price of potash fertilizers is basically determined the space for the price rise of nitrogenous fertilizers and phosphate fertilizers will be restricted.