German Potassium Chloride Prices Remain Bearish December as Fertilizer Demand Declines Amidst Brazilian Drought
German Potassium Chloride Prices Remain Bearish December as Fertilizer Demand Declines Amidst Brazilian Drought

German Potassium Chloride Prices Remain Bearish December as Fertilizer Demand Declines Amidst Brazilian Drought

  • 15-Jan-2024 3:39 PM
  • Journalist: Bob Duffler

Hamburg, Germany: The German potassium chloride market exhibited a bearish trend in December 2023. According to industry experts, most potassium chloride consumer markets were oversupplied. This month witnessed high destocking, and overall demand across other European markets remained mostly poor. Additionally, the decrease in the prices of essential raw materials, such as natural gas and ammonia, coupled with lower production rates, exerted downward cost pressure on potassium chloride. The year-end holidays and the destocking season typically led to diminished industrial activity and reduced demand for raw materials of potassium chloride.

The drought in Brazil, a major consumer market for potassium chloride in Germany, has prompted farmers to postpone their fertilizer acquisitions for the upcoming corn-planting season, affecting sales for global fertilizer supplies in the top corn-exporting nation. The drought, associated with the El Niño climate phenomenon, underscores the instability facing global agriculture amid the acceleration of climate change. Fertilizer companies are grappling with reduced profits due to the decline in crop and fertilizer prices following their peak at the onset of the Russia-Ukraine war.

Industry experts project that the reduction in crop yield will result in approximately a 4% decrease in Brazilian demand for potash fertilizer, equivalent to 500,000 tons. At current prices, this volume of potash is valued at around $160 million. As of early December, farmers in the corn-producing states of Parana and Mato Grosso do Sul had acquired only 60% of their anticipated fertilizer requirements, a lower figure compared to the usual 80% at this time of the year.

Brazilian Muriate of Potash (potassium chloride) prices have experienced a year-over-year decline of 36%, indicating a notable decrease in demand. Despite this, full-year potash imports for Brazil are anticipated to reach record levels, primarily due to strong shipments earlier in the year. However, there is a possibility that some of these imports might remain in retailers' warehouses if farmers reduce their purchases. The drought has compelled crop chemical producers FMC and Corteva to offer Brazilian stocks at a discounted rate due to demand falling below expectations.

According to the ChemAnalyst database, the prices of Potassium Chloride are expected to demonstrate an inclining trend in the first quarter of 2024. Industry experts foresee that this notable increase could primarily be attributed to robust demand and elevated production costs of potassium chloride. The demand for potassium chloride from fertilizer producers is presumed to improve, resulting in a somewhat bullish situation in the offtake market. Orders for the product are anticipated to experience an uptrend as MOP (Potassium Chloride) producers could face robust demand from fertilizer producers.

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