Wucai Securities: Long-term global demand remains stable growth, potassium fertilizer prices are likely to rise and difficult to fall this year

According to the Zhitong Finance APP, Wulian Securities has released a research report stating that the global potash fertilizer market is characterized by an oligopoly, with stable growth in medium to long-term demand expected. It is estimated that from 2024 to 2030, the global potash fertilizer demand will have an average annual compound growth rate of 2.67%, reaching 85.2 million tons by 2030. On the supply side, BHP's Jansen project in Canada will become a major increment, and Chinese companies are actively laying out in the Gammou area of Laos. In terms of prices, potash fertilizer prices are likely to rise and be difficult to fall between 2025 and 2026, and may gradually come under pressure after 2027 but will be supported by marginal costs. The main points of Wulian Securities are as follows: Industry: Essential element for crop growth, oligopoly in the industry Potassium is one of the three essential nutrients for crop growth, known as "the food of food." According to Business Research Insights, the global potash fertilizer market size is expected to reach USD 28.12 billion in 2024. Potassium ore is divided into solid potassium ore and potassium brine, with solid potassium ore accounting for the vast majority and having a simple mining process. The distribution of global potassium resources is highly uneven, with China's reserves accounting for only 4% of the global total. The industry has a high concentration of production capacity, with a clear oligopoly pattern, regional supply and demand mismatches, and major demand countries relying on import trade. Demand: Stable growth in global potash fertilizer demand in the medium to long term According to the United Nations, the global population is expected to grow to 8.5 billion by 2030, with population growth continuously increasing food demand. The growth space for global arable land is limited, making potash fertilizer demand rigid. Regionally, China, Southeast Asia, and Brazil are areas with relatively fast growth in global potash fertilizer demand. In China, adjustments in planting structure and an increase in the proportion of potash fertilizer application are leading to steady growth in demand; Indonesia and Malaysia are continuously increasing the promotion of biodiesel, boosting palm oil demand and driving high growth in Southeast Asia's potash fertilizer demand; Brazil's soybean production continues to increase, resulting in strong potash fertilizer demand. The firm expects an average annual compound growth rate of 2.67% in global potash fertilizer demand from 2024 to 2030, reaching 85.2 million tons by 2030. Supply: High capital expenditure for greenfield projects, BHP project is the main increment Greenfield potash projects require high capital expenditure and have long development cycles, with most million-ton-level potash mines having a development cycle of 7-10 years and a ramp-up period of 2-3 years. In terms of capacity, some old capacities are exiting, and there are many new planned projects. According to the firm’s statistics, there are over 20 million tons of planned new potash capacity globally, mostly from greenfield projects, but progress on greenfield projects is slow, while brownfield projects are expanding rapidly. Mining giant BHP's Jansen project in Canada has a total planned capacity of 8.5 million tons for phases one and two, with a long-term plan of 16-17 million tons, which could propel it into the top five global potash fertilizer companies, changing the existing potash fertilizer landscape. Chinese companies are actively laying out in Laos, with Asia-potash and ETS making rapid progress in the Gammou area, already beginning to feed back into the domestic market. If existing projects under construction reach production on schedule, the firm expects global potash fertilizer production to reach 90.9 million tons by 2030, with an average annual compound growth rate of 2.35% from 2024 to 2030. Price: Short to medium-term trends are strong, long-term supported by marginal costs Overall, global potash resources are not scarce and have long been in a situation of oversupply. However, oligopolies control the pace of resource development and adjust production capacity utilization rates, while potash fertilizers also rely on inventory (including national reserves), trade, and other factors to adjust short-term supply and demand. Due to the production cuts by the two giants, Belaruskali and Uralkali, and the strong demand for potash fertilizers in regions such as Brazil, Southeast Asia, and China, global supply is relatively tight in the short term. The large contracts between China and India have essentially set a benchmark price for global potash fertilizer prices. The bank expects that from 2025 to 2026, global potash fertilizer prices will show a tendency to rise easily but fall with difficulty, with a strong price trend. Starting in 2027, as new potash fertilizer projects from companies like BHP come online, global potash supply and demand will gradually ease, and prices may come under pressure, but will be supported by marginal costs. Risk Warning: 1. Agricultural demand may be lower than expected; 2. New production capacity construction may exceed expectations