Potash Sector Enters Sound Development Track  
By Qi Zhaoying, China Inorganic Salt Industry Association   

Due to China's lack of soluble potash resources, much of the potash used here has to be imported. With the drastic increase of local potash output in the past five years, the import volume has declined. Take potassium chloride for instance. The import volume reached a peak of 9.414 million tons (physical goods) in 2007. With impacts from the financial crisis and the rising price of potash in the first half of 2008, the demand dropped drastically. The import volume in 2009 was only a little more than 1.9 million tons, being 1/5 of that of 2007. In the meantime, China's potash exports increased year-on-year. The amount of potassium chloride exported increased from 58 000 tons in 2004 to 395 000 tons in 2009. China's potash self-sufficiency rate has also kept going up. It increased from 23.2% in 2004 to 68.3% in 2009.

Supply of Potash in China from 2004 to 2009      (thousand tons K2O)
Year        2004    2005    2006    2007    2008    2009
Capacity    1 765    1 926    2 434    2 606    3 013    3 899
Output      1 516    1 623    2 334    2 599    2 639    3 207
Import volume    5 144    6 152    4 909    6 301    3 515    1 748
Export volume    119     112     266     197     249     261
Total supply    6 541    7 663    6 977    8 703    5 905    4 694
Self-sufficiency rate (%)    23.2    21.2    33.5    29.9    44.7    68.3
Source: CISIA


1. Natural potash

China's total capacity to extract natural potash already exceeded 5.0 million t/a (physical goods) in 2009, which can meet around 50% of the domestic market demand. Varieties of natural potash produced from sylvite resources in China mainly include potassium chloride, potassium sulfate and potassium magnesium sulfate. Major raw materials include salt lake brine, solid sylvite and sea salt bittern.
   Potassium chloride: China's potassium chloride production has developed rapidly in the past five years. The capacity increased from 1.875 million t/a (physical goods, the same below) in 2004 to 3.59 million t/a in 2009 with an average annual growth of 15.7%. The output increased from 1.418 million tons to 3.61 million tons with an average annual growth of 30.9%. China has 31 potassium chloride producers including Qinghai Salt Lake Industry Group Co Ltd, Germu Zangge Potash Fertilizer Co Ltd and Qinghai CAAC Resources Co Ltd.
   Potassium sulfate: China's capacity to produce potassium sulfate was quite low until 2008. With the completion of a 1.20 million t/a potassium sulfate unit in SDIC Xinjiang Luobupo Potash Co Ltd in 2009, the total capacity of resource potassium sulfate in the country reached 1.32 million t/a and the output reached 770 000 tons, a drastic increase of 786.4% and 511.8% over the previous year. SDIC Xinjiang Luobupo Potash Co Ltd uses sulfate salt-containing lake brine as raw material. Similarly, the Potassium Sulfate Plant of Shandong Haihua Company Limited uses seawater to produce potassium sulfate.
   Potassium magnesium sulfate: China started producing potassium magnesium sulfate five years ago, and now is home to seven potassium magnesium sulfate producers:
  * Qinghai CITIC Guoan Technology Co Ltd
  * Qinghai CITIC Guoan Lianyu Potash Fertilizer Co Ltd
  * Qinghai Bindi Potash Co Ltd
  * SDIC Xinjiang Luobupo Potash Co Ltd
  * Qinghai Gaoduan Salt Lake Technology Co Ltd
  * Xinjiang Yaret Chemical Co Ltd
  * the Potassium Sulfate Plant of Shandong Haihua Company Limited
The total capacity reached 1.048 million t/a in 2009 and the output was 402 000 tons, an increase of 41.0% and 140% respectively over the previous year.
   China's total capacity to produce natural potash products including potassium chloride, potassium sulfate and potassium magnesium sulfate was 3.899 million t/a (converted to K2O) in 2009 and the output was 3.207 million tons (converted to K2O).

2. Processed potash

In China, the main varieties of processed potash produced from natural potassium chloride are Mannheim-process potassium sulfate, potassium nitrate and potassium dihydrogen phosphate.
   Potassium sulfate: Mannheim-process and mirabilite-process jointly form a firm backing of the processed potassium sulfate market in China. The potassium sulfate production using Mannheim-process has developed rapidly. The number of producers increased from around 40 in 2004 to nearly 60 in 2009 and the capacity of production units increased from around 750 000 t/a to more than 2.30 million t/a. With impacts from natural potassium sulfate and great price fluctuations of raw material potassium chloride, potassium sulfate producers using Mannheim-process had a difficult time in 2008 and 2009, and output shrank drastically. The operating rate was less than 20% in 2009 and output was only around 400 000 tons. The supply of raw material potassium chloride stabilized in 2010and the operating rate increased considerably.
   Potassium nitrate: Consumption of potassium nitrate in agriculture has grown rapidly in recent years. China's annual output of potassium nitrate was less than 50 000 tons in the early 1990s. The capacity was already close to 950 000 t/a in 2009, the world's largest. The biggest single-unit capacity has reached 50 000 t/a. Quite a few units are also being expanded or planned for construction. China has 37 major potassium nitrate producers today.
   Potassium dihydrogen phosphate: China has more than 20 potassium dihydrogen phosphate producers today, with a total capacity between 200 000 t/a and 300 000 t/a. The production scale for each company is small and scattered. A relatively big single-unit capacity is 20 000 t/a. The country's total output was around 60 000 tons in the period of 2004 to 2008 and increased to around 80 000 tons in 2009.
   The potash market price trend in China after 2004 can be divided into three stages. The first stage was from 2004 to September 2008. The market price of potassium chloride had an astonishing increase from RMB1 400 per ton to RMB5 000 per ton. The second stage was from September 2008 to September 2009. The unduly high price in the first stage suppressed demand in the end user market. There were also impacts from the economic crisis. The price of potash went all way down to around RMB2 400 per ton in September 2009, a drop of 52% from the peak price. The third stage is from October 2009 to the present day. The market recovered and a rational price has been maintained at RMB2 500-2 850 per ton.
   Along with the recovery of the global economy, the potash production in China will develop stably. The output of potash in China is expected to reach 3.5 million tons (converted to K2O) in