Potassium Chloride: Forecasting the Price Bottom via “Three Key Indicators”

China’s domestic potassium chloride market shifted to a buyer’s market in August, with prices trending steadily lower. On the one hand, potassium chloride downstream demand fell short of expectations, and major compound fertilizer operators showed little enthusiasm for production. On the other hand, supply continued to surge, building up mounting inventory pressure in some regions. Distributors were eager to liquidate stocks, market sentiment turned bearish, and prices for most grades fell below the state reserve guidance prices. According to ZCIC data, as of August 28, the monthly average market price of imported 62% white potassium stood at RMB 3,111.56 per tonne, down RMB 83.22 per tonne month‑on‑month, a 2.60% drop, and 4.60% lower year-on-year.

The market is now at the transition between autumn fertilizer stockpiling and application, and the recovery of potash market sentiment has become the focal point of bull‑bear rivalry. ZCIC suggests that three core dimensions should be closely monitored to gauge the potash market outlook at the current stage:

First, policy regulation. This is a critical period for autumn fertilizer production and inventory building, and ensuring adequate fertilizer supply while stabilizing prices remains the core policy priority. Since the start of this year, external disruptions have pushed sulphur prices sharply higher, driving up production costs for phosphate fertilizer manufacturers and turning phosphate fertilizers into high‑cost products within the fertilizer sector. In contrast, urea and potash prices have corrected to varying degrees, easing cost pressures on compound fertilizer producers and lowering the overall cost of autumn fertilization. Following this logic, policies securing fertilizer supply will stay unchanged during the autumn fertilizer season, and state reserve guidance prices are likely to remain stable. Reportedly, flat selling prices for domestically produced potassium chloride in September serve as solid evidence of continued supply‑guarantee policies.

Second, international factors. Volatile situations in the Middle East have triggered wild swings in global energy prices and created external shocks for domestic bulk commodities, yet the domestic market has shown initial signs of growing immunity to such disturbances. Hit by stalled cost pass‑through from raw materials and weaker expectations for downstream demand, upstream product prices are under downward pressure.

Third, shifts in rigid demand. In early and mid‑August, compound fertilizer sales advanced slowly, weighed down by winding‑down rice fertilizer deliveries and a slow start to autumn stockpiling in northern areas. In late August, after most fertilizer companies clarified their pricing and sales policies, distributors began clearing inventories. Physical stocks trickled down to grassroots retail outlets, and market purchases turned to restocking only as needed. By the end of August, rice fertilizer clearance had been completed, and arrivals at major autumn stockpiling markets reached roughly 40%, slightly below market forecasts. Burdened by intertwined pressures on production, sales and inventories, compound fertilizer plants had limited room to raise operating rates.

These three factors are the most powerful market drivers. Policy changes deliver the fastest results, followed by international news flows, while rigid demand recovers at a relatively slow pace. Besides these factors, potash import arrivals this year are markedly higher than in the same period last year, and the delivery schedule of new cargoes in the months ahead will also attract close market attention.

Marginal Improvements Spark Trading Rivalry; Prices May Hit a Phased Bottom

After two consecutive months of declines, panic has not fully faded from the potash market, yet signs of marginal improvement are emerging. For one thing, major compound fertilizer producers have entered the late phase of autumn fertilizer output, lifting trading activity modestly, though buyers are adopting a cautious, small‑batch purchasing strategy. For another, small‑and‑medium producers may quicken resumption of operations, boosting raw material consumption and mandatory restocking demand. This can further improve market circulation and shore up confidence.

Balancing all relevant factors, ZCIC holds that bull‑bear divergence will intensify in China’s potash market in September. Prices may follow a pattern of “falling first then leveling off”, and the market is likely to touch a phased bottom.