Recently, the National Development and Reform Commission and relevant departments and companies have researched and formulated new potash fertilizer pricing policies and initially determined to eliminate the supervision of potash fertilizer prices and implement direct subsidies for farmers. According to this new policy, the domestic potash fertilizer ex-factory prices are expected to be liberalized. The specific plan will be implemented after the approval of the State Council.
Comment:
China is a country with a high level of potassium deficiency. Approximately 70% of the potash fertilizer needs to be imported every year. With the price of potash fertilizer continuing to rise sharply in the international market, it is not only unreasonable to rely on the suppression of a small amount of domestic product prices that account for only about 30% of all domestic demand. And, it will affect the domestic manufacturers' production enthusiasm and inhibit the effective release of domestic potash fertilizer production capacity.
From the recent trend of potash fertilizer prices in the international market, it still maintains a strong upward trend. Among them, the CF prices of potassium chloride purchased by Southeast Asia and Brazil with the largest increase have risen to 850 and 750 US dollars/ton.
In mid-April, the 2008 international potash contract price was announced. The price of potash fertilizer supplied to China will increase from US$170-190 per ton in 2007 to US$570-590, plus the cost of Shanghai freight and domestic links, and the total price will exceed US$700.
In the past, China's self-produced potash fertilizers were independently priced in accordance with changes in the international market. Generally, they were reduced by 50-100 yuan per ton on the basis of imported CIF. However, the current price of potash fertilizer is controlled at 3,700 yuan/ton. After management controls domestic potash fertilizer prices, domestic suppliers basically stop quotations and only send orders for old contracts, or adopt passive delivery until the new price policy is determined and then settled.
After the introduction of the Potash Direct Subsidy Policy, the profitability of potash fertilizer manufacturers will be greatly enhanced. We still maintain the previous recommendation for the potash industry and recommend that investors focus on the leading company Salt Lake Potash (000792). Please pay attention to our in-depth research report for details.
Comment:
China is a country with a high level of potassium deficiency. Approximately 70% of the potash fertilizer needs to be imported every year. With the price of potash fertilizer continuing to rise sharply in the international market, it is not only unreasonable to rely on the suppression of a small amount of domestic product prices that account for only about 30% of all domestic demand. And, it will affect the domestic manufacturers' production enthusiasm and inhibit the effective release of domestic potash fertilizer production capacity.
From the recent trend of potash fertilizer prices in the international market, it still maintains a strong upward trend. Among them, the CF prices of potassium chloride purchased by Southeast Asia and Brazil with the largest increase have risen to 850 and 750 US dollars/ton.
In mid-April, the 2008 international potash contract price was announced. The price of potash fertilizer supplied to China will increase from US$170-190 per ton in 2007 to US$570-590, plus the cost of Shanghai freight and domestic links, and the total price will exceed US$700.
In the past, China's self-produced potash fertilizers were independently priced in accordance with changes in the international market. Generally, they were reduced by 50-100 yuan per ton on the basis of imported CIF. However, the current price of potash fertilizer is controlled at 3,700 yuan/ton. After management controls domestic potash fertilizer prices, domestic suppliers basically stop quotations and only send orders for old contracts, or adopt passive delivery until the new price policy is determined and then settled.
After the introduction of the Potash Direct Subsidy Policy, the profitability of potash fertilizer manufacturers will be greatly enhanced. We still maintain the previous recommendation for the potash industry and recommend that investors focus on the leading company Salt Lake Potash (000792). Please pay attention to our in-depth research report for details.
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