Potassium tight supply and demand upward price trend

 
Supply-side constraints and processing and production capacity of potassium severely affected by the slow delivery

Potassium products into resource-based and processing enterprises and processing due to the relatively high cost of production and unmarketable byproduct hydrochloric acid and environmental issues seriously restrict such production and processing enterprises in recent years, resulting in less than 5 percent operating rate is much lower than the resource enterprises. Currently prices are rising potassium channel but high costs and lower inhibitions hydrochloric intractable processing enterprises seem more rational.

13 years of potassium industry production capacity of approximately 4.3 million tons and this year added approximately 550,000 tons mainly for new entrants and processing capacity is expected to slow the release of the actual industry production capacity is very limited.

Potassium benefit from the demand side: such as tobacco and tea growing area of steady growth have a comparative advantage based compound fertilizer

Potassium fertilizer which has a dual application objects tobacco, tea, and fruit and vegetable crops such as 13 years of steady growth area for tobacco and tea acreage year on year growth of approximately 9.6% and 8.7%. The second half of the season is currently bidding tobacco fertilizer tendering Sichuan and other regions have started to look forward to.

Look for the production of compound fertilizer from the point of view due to the scope of application of compound fertilizer and fertilizer have a comparative advantage has been gradually recognized by the market and therefore fully benefit from potassium.

Under tight supply and demand potassium upward price trend

Under tight supply and potassium (51%) price of about 3,150 yuan from the beginning / ton up to the current 3450 yuan / ton or larger. Potassium current industry inventory orders on hand most of the manufacturers have little to 8,9 months. Considering the second half of the tobacco fertilizer and compound fertilizer tender coming season will continue to promote; supply-side phenomenon has become increasingly serious hydrochloric unmarketable slow delivery of new capacity; Our prices will determine the second half of the potassium is expected to maintain a rising trend.

Investment advice: Guannonggufen benefit due to high elasticity suggested an active interest

Potassium-related listed companies Guannonggufen (600,251) (potassium due to hold a leading 20.3% domestic equity Luo K Company). Luo K's existing capacity of 1.4 million tons of potassium sulfate (resource type) for 13 years has basically reached full capacity production and sales.

Volume estimates by 1.4 million tons of goods when the annual average price of potassium 3400 yuan / ton on Guannonggufen performance contribution of 0.94 yuan / share; while potassium prices rose 100 yuan / ton Guannonggufen will increase annualized performance thickness of 0.06 yuan / share greater flexibility recommend investors to take an active interest.