Potassium Chloride Market in China, 2015

By Wang Hongrun, China National Chemical Economic and Technical Development Centre

Supply

China’s potassium chloride capacity increased from 3.31 million t/a in 2006 to 9.13 million t/a in 2015 with an average annual growth of 11.9%. The major growth was in Qinghai. There were 32 producers of potassium chloride in 2015, unchanged from 2014. Output was 7.43 million tons in 2015, an all-time high and an increase of 1.4% over 2014. Table 1 shows the major producers of potassium chloride in China in 2015.
There were 19 producers of pure potassium chloride in China in 2015, seven fewer than in 2014. Capacity was 300 kt/a (physical goods), unchanged from 2014. Output was 125 kt, a drop of 16%. The overall operating rate was 42%, a drop of 14.3%. Table 2 shows the growth of potassium chloride capacity.
Today, China’s potash investment focus is concentrated in Africa and Laos. China Aviation Industry Corporation is constructing a 1.5-3.0 million t/a potash fertilizer production base in Africa, and the construction of a new 500 kt/a unit is now under way there. Evergreen Holding Group has constructed a 1.2 million t/a potash fertilizer production base in Africa and plans to construct a second 1.2 million t/a unit. China National Agricultural Production Means Group Corporation is constructing a 0.5-2.0 million t/a potash fertilizer production base in Laos; a 100 kt/a unit is already completed and the construction of a 500 kt/a unit is under way. Sichuan Kaiyuan Group Co., Ltd. is constructing a 0.5-3.0 million t/a potash fertilizer production base in Laos – a 500 kt/a unit is already completed there.
Through capital operation, some super large groups in China have acquired shares in production capacities in countries with concentrated potash fertilizer capacities such as Canada, Russia and Belarus. For example, China Travel Financial Investment Holdings Co., Ltd. and China Investment Corporation already hold a combined 24.5% stakes in Ural Potash Fertilizer Co., Ltd. It is expected that through international capacity cooperation 3-5 foreign potash fertilizer production bases with considerable international competitiveness will be established, reaching a combined capacity of 3.0-4.0 million t/a in the next five years.

Table 1   Major producers of potassium chloride in China, 2015

Producer    Capacity (kt/a)
Qinghai Salt Lake Industry Group Co., Ltd.    5 000
Qinghai Golmud Zangge Potash Fertilizer Co., Ltd.    2 000
Qinghai CITIC Guo’an Technology Development Co., Ltd.    300
Qinghai CATIC Resources Co., Ltd.    250
Qinghai Geology & Mineral Group Co., Ltd.    200
Qinghai Mangya Jingxin Hualong Potash Fertilizer Co., Ltd.    200
Qinghai Beijing Kunlong Weiye Golmud Co., Ltd.    200
Qinghai Western Chemical Fertilizer Co., Ltd.    200
Guotai Salt Lake Chemical Fertilizer Co., Ltd.    200
Mangya Kangtai Potash Fertilizer Development Co., Ltd.    150
Qinghai Yellow River Potash Fertilizer Plant    100
Qinghai Bindi Potash Fertilizer Co., Ltd.    100
Others    230
Total    9 130


Table 2    Growth of potassium chloride capacity in China, 2006-2016

Year    2006    2011    2012    2013    2014    2016E
Capacity (kt/a)    3 310    5 940    6 580    7 400    7 820    9 320
Growth (%)    12.4% (during 2006-2011), 9.4% (during 2011-2016)

Table 3   China’s foreign trade in potassium chloride, 2013-2015

Year    Import    Export
    Volume
(kt)    Value
(US$ million)    Volume
(kt)    Value
(US$ million)
2013    6 030    2 376.94    298    128.62
2014    8 031    2 521.94    313    105.86
2015    9 429    2 972.12    274    99.14



Demand

Potassium chloride is consumed mainly in the blending of compound fertilizers, in direct application as fertilizer and in making other potassium salts such as potassium hydroxide, potassium carbonate, potassium sulfate and potassium nitrate. More than 80% of potassium chloride is directly used as fertilizer or incorporated in blended fertilizers. The balance is used to produce other potassium salts. China’s apparent consumption of potassium chloride reached 16.59 million tons in 2015, an increase of 10.2% over the previous year.
China’s potassium chloride capacity is growing slowly in 2016, and is likely to reach around 9.3 million t/a. Output will be around 8.0 million tons, as in 2015. The import volume is expected to be 6.0-8.0 million tons. With the increase of potassium chloride output in China, the export volume will likely grow a bit. Apparent consumption is expected to differ little from 2015. Downstream, resource-type and processing-type potassium sulfate capacity will increase around 500 kt/a (physical goods) this year. Adding this to the 7.75 million t/a of 2015, total capacity is expected to reach 8.25 million t/a.

Foreign trade

China imported 9.43 million tons of potassium chloride in 2015, an increase of 1.40 million tons (17.9%) over the previous year. The export volume was 274 kt, a drop of 39 kt and 12.5% from the previous year. Table 3 shows the import and export of potassium chloride in China in recent years.
No analytical pure potassium chloride was imported or exported in 2015. The import volume of pure potassium chloride was 93 kt and the import value was US$3.53 million, accounting respectively for 0.98% of the total import amount and 0.12% of the total import value.
China imported other potassium chloride varieties mainly from Belarus, Canada and Russia in 2015. The amount imported from Belarus was 2.60 million tons, accounting for 27.6% of the total. The amount imported from Canada was 2.27 million tons, accounting for 22.0%. The amount imported from Russia was 2.18 million tons, accounting for 23.1%. These three regions accounted for 74.7% of the total amount of other potassium chloride varieties imported to China.

Market price

As the entire domestic chemical fertilizer market fared poorly in 2015, potassium chloride prices were on the low side overall. Take the ex-factory price of Qinghai Salt Lake potassium chloride for instance. The average price of 57% potassium chloride powder was RMB1 892/t in 2015, an increase of 4.1% over the previous year. The average price of 60% potassium chloride powder was RMB2 113/t, an increase of 1.8% over the price of RMB2 076/t (60% Qinghai) in 2014. Figure 1 shows the ex-factory price trend of Qinghai Salt Lake potassium chloride in 2015.
At the end of 2015, Qarhan Salt Lake potassium chloride could meet 2/3 of domestic demand. It is expected that both the capacity and the output of potassium chloride in China will increase very little in 2016, and the potassium chloride market will remain stable in the near future.