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After several months of negotiations, India's annual potassium fertilizer contract was finally announced on April 4, 2023. India's main importer, IPL, signed the 2023 annual potassium fertilizer contract with Canpotex at a price of CFR usd422/ton. The shipping schedule has extended to September 30, 2023, which is a decrease of usd168/ton compared to the price of the 2022 potassium fertilizer contract, which is basically in line with the price expectations of the Indian big contract.
From the negotiation of major contracts in the past 5 years, it could be seen that in 2019, due to the instability of international potassium fertilizer prices and sufficient domestic inventory supply, China did not sign major contracts, while India signed them at a price of CFR usd280/ton. But in 2021, China maintained the price of usd247 per ton signing in February of the beginning of the year, while India adjusted the price of large contracts three times, from the initial usd247 per ton to the later usd280 per ton, and the end of the year usd445 per ton. Following the trend of international surge, India adjusted the price of large contracts for potassium fertilizer. In 2022, China and India signed a high-level potash fertilizer agreement, but since the second half of 2022, the price of potash fertilizer in both China's domestic and international markets has continued to decline.
In the state of continuous decline in international potassium fertilizer prices, the negotiation of major contracts between China and India is crucial and has also received significant attention from both international and domestic sources. However, the large-scale contract negotiations that began in India at the end of 2022, coupled with ongoing discussions with international potassium fertilizer suppliers, and the ongoing downward trend in international prices, have also been delayed in determining the negotiations. After India signed the contract at the price of usd422/ton, according to the normal price difference, China's price may be usd10 lower or equal to India's, then China's price range could be usd410-420/ton, which is equivalent to the price of potassium chloride is about 3161-3235 yuan/ton, but this price is slightly different from the current domestic market price. Therefore, it has to be asked whether China can stabilize the domestic market after the signing of the Indian contract?
In China, the port price of 60% white potassium is mostly 3000-3100 yuan/ton, and the corresponding CIF price is usd400-410 per ton. According to the current domestic market, the operating rate of downstream compound fertilizer plants continues to decline, and the declining fertilizer raw materials are kept. In addition, later production in compound fertilizer is also dominated by high nitrogen fertilizer. Therefore, it is uncertain to expect the role of stabilizing the domestic market price after the signing of the big contract of India. Whether the price of domestic potash fertilizer market can be stabilized and whether China will follow up the negotiation of this big contract is still to be seen in the follow-up supply of imported goods. In the short term, the domestic potash fertilizer market will be in a wait-and-see state.