China Faces Chemical Fertilizer Shortage Amid Soaring Potassium Prices

China imports potassium fertilizer from Canada at $590 per ton, up 139% YoY
Chemical fertilizer shortage ahead of sowing season... Global food inflation concerns
China likely to continue chemical fertilizer export restrictions

[Asia Economy Beijing=Special Correspondent Jo Young-shin] As international potassium fertilizer prices soar, the Chinese fertilizer market is showing abnormal signs. Chinese media analyzed that chemical fertilizer prices are rising due to escalating tensions between Russia and Ukraine, energy shortages in the European Union (EU), rising natural gas prices, and abnormal operation of global logistics networks. It is expected that the shortage of chemical fertilizers ahead of the sowing season will have a considerable impact on international grain prices.

Photo by Baidu Capture

According to Chinese media such as Caixin on the 22nd, a Chinese fertilizer delegation composed of state-owned chemical companies including Sinochem recently signed an annual import contract for potassium fertilizer with Canadian chemical fertilizer company Canpotex at $590 per ton (CFR - cost and freight). This is a 139% increase from last year's $247 per ton and the highest price in the past five years.

China is a major producer of potassium fertilizer but its self-sufficiency rate is only 46.7% (as of 2020). China imports the deficient potassium fertilizer from overseas countries such as Canada. According to China Dongfang Caifu Network, the global potassium reserves are estimated at 3.7 billion tons, with Canada, Belarus, and Russia accounting for 30%, 20%, and 16% respectively. China's potassium reserves account for 9%, mainly located in Qinghai Province and Xinjiang Uygur Autonomous Region.

Chinese media reported that potassium fertilizer stocks are approaching their lowest levels and forecast that price increases for potassium fertilizer within China are inevitable ahead of the spring sowing season.

Guangda Securities expressed optimism that the large-scale import contract has eased supply but predicted that the market will inevitably be affected for the time being due to high import prices.

The state-run Global Times reported that a global shortage of NPK (nitrogen, phosphorus, potassium) chemical fertilizers is unavoidable. The media added that fossil energy (natural gas, sulfur, coal) is heavily required to produce NPK.

Due to rising chemical fertilizer prices and shortages of specific fertilizers, China's fertilizer export restrictions are expected to continue for the time being. The Chinese government imposed export restrictions on 29 types of chemical fertilizers including urea, ammonium nitrate, calcium nitrate, phosphate, and potassium on October 15 last year. Last year's urea solution shortage in South Korea was also due to China's chemical fertilizer export restrictions.

Wang Liqing, Secretary-General of the China Nitrogen Fertilizer Industry Association, said, "Domestic supply of chemical fertilizers such as nitrogen is tight and this situation will continue for the time being," adding, "We are working to secure domestic supply ahead of the sowing season."

Chinese media forecast that shortages and sharp price increases in chemical fertilizers could cause fertilizer shortages in emerging and developing countries. Fertilizer shortages lead to rising grain prices, which could trigger global food inflation.

The United Nations Food and Agriculture Organization (FAO) recently reported that due to tensions between Russia and Ukraine, rising energy prices such as natural gas, and abnormal weather, chemical fertilizer prices could rise by more than 8% per ton.

Meanwhile, as food security including chemical fertilizer shortages is emphasized, the Guangxi Zhuang Autonomous Region in China announced a "Food Production Incentive Method" that offers rewards of up to 5 million yuan (approximately 950 million KRW) depending on food production volume. The Chinese government has set a grain production target of over 650 million tons this year.

This content was produced with the assistance of AI translation services.