Guohai Securities: Limited new global potash fertilizer production capacity, high prosperity is expected to continue in the medium term

According to the Zhitong Finance APP, Guohai Securities released a research report stating that against the backdrop of increasing population growth and heightened attention to food security issues, global potash fertilizer demand is expected to grow steadily at a compound annual growth rate (CAGR) of 3.2% from 2025 to 2027. On the supply side, before the end of 2026, there will be limited new potash fertilizer production capacity globally, and the investment cost per ton for major new overseas capacity by BHP will be high. Existing major players' old mines are gradually entering the marginal mining stage, with increased mining difficulty and rising extraction costs. It is expected that the high prosperity of global potash fertilizer will continue in the medium term. Currently, the domestic market is in the off-season for fertilizer use, but as the demand for autumn fertilizer gradually starts, coupled with positive support from international markets such as India, short-term potash fertilizer prices are expected to maintain high prosperity.

Guohai Securities' main viewpoints are as follows:

The high prosperity of potash fertilizer is expected to continue in the medium term

Against the backdrop of increasing population growth and heightened attention to food security issues, global potash fertilizer demand is expected to grow steadily at a CAGR of 3.2% from 2025 to 2027. On the supply side, before the end of 2026, there will be limited new potash fertilizer production capacity globally, and the investment cost per ton for major new overseas capacity by BHP will be high. Existing major players' old mines are gradually entering the marginal mining stage, with increased mining difficulty and rising extraction costs. It is expected that the high prosperity of global potash fertilizer will continue in the medium term.

In the short term, on the supply side, according to the WeChat public account of the China Inorganic Salt Industry Association, Russia and Belarus are expected to reduce exports by more than 1.8 million tons this year; on the other hand, the volume of imported potash arriving by sea is limited. According to Longzhong Information, on September 11, 2025, the potash fertilizer inventory at major ports was only 1.63 million tons, which is at the 3rd percentile since 2018, far below last year's 3.09 million tons, indicating insufficient actual available supply. On June 12, our country signed a large contract for potash fertilizer imports at USD 346 per ton (CFR), equivalent to a domestic cost of about RMB 2865 per ton, providing strong cost support. This price is only USD 3 per ton lower than the price of a large contract in India a week ago, reflecting the current tight global potash fertilizer supply.

On the demand side, the domestic market is in the off-season for fertilizer use, but as the demand for autumn fertilizer gradually starts, coupled with positive support from international markets such as India, short-term potash fertilizer prices are expected to maintain high prosperity.

Potash fertilizer demand is steadily increasing

Potassium is one of the three essential nutrients for crop growth, and compared to nitrogen and phosphorus fertilizers, potash fertilizer has a stronger consumption elasticity. According to Nutrien data, global potash fertilizer demand increased from 60 million tons in 2016 to 72.5 million tons in 2024, with a CAGR of 2.4%. It is expected that in 2025, potash fertilizer demand will continue to grow moderately at a rate of 3%. Our country is a major consumer of potash fertilizer, accounting for about 26% of global consumption. According to Baichuan Yingfu, in 2024, China's apparent consumption of potassium chloride is expected to be about 18.72 million tons, with a compound annual growth rate of about 5.5% from 2017 to 2024, higher than the global average growth rate.

Limited new potash fertilizer production capacity before 2026

Potash fertilizer is a resource monopoly industry, with global potash resources being extremely unevenly distributed, mainly concentrated in Canada, Russia, Belarus, and Laos. In 2024, global potash fertilizer production capacity is expected to be about 77.2 million tons, with planned production capacity reaching 20.61 million tons, but it is expected that before 2026, the only new production capacity will be about 2 million tons from Asia-potash's expansion in Laos China's potash fertilizer industry has a high concentration, primarily located in Qinghai Province. As of 2024, Qinghai Yanhu Industry is the largest potassium chloride producer in China, with a production capacity share of 54%. There is a significant gap in China's potash fertilizer supply, with import dependence remaining above 50% for a long time, and it is expected to rise sharply to 67% in 2024.

Investment Recommendations and Target Stocks

Considering the mid-term expectations for potash fertilizer to maintain high prosperity, we initiate coverage with a "Recommended" rating for the potash fertilizer industry. Key recommendations include Asia-potash (000893.SZ) (capacity expansion is steadily advancing, aiming to build a world-class potash fertilizer enterprise), Qinghai Yanhu Industry (000792.SZ) (the ballast of domestic potash fertilizer), and ETS (002545.SZ) (actively laying out potash resource mines).

Risk Warning

Potash fertilizer demand may fall short of expectations, new potash fertilizer production capacity may exceed expectations, changes in potash fertilizer-related policies, performance of recommended stocks may not meet expectations, and construction of new production capacity for recommended stocks may not meet expectations