Phosphate fertilizer authority predicts, how will the fertilizer market be this winter and next spring?

          Recently, two of the world's top fertilizer companies have issued forecasts: the soaring Price trend of fertilizers, including potash fertilizers, will continue. On November 1, Canadian Nutrien (NTR.N), a global potash fertilizer producer, raised its full-year Achievements expectations, as it expects strong crop Prices to support fertilizer Prices. Driven by record demand and strong crop profits, potash Prices in all major markets are continuing to rise; another major global potash fertilizer producer, Mosaic (MOS.N), also stated in a statement that it expects the Price increase trend to continue. 90% of the company's sales in the fourth quarter of this year have been presold, and some customers have further requested prepayment for the second quarter of 2022.

         Since the second half of 2020, global potash fertilizer Prices have been rising steadily, hitting record highs and exceeding potash fertilizer Prices in the past decade, reaching the second highest point in history, and also pushing up the stock Prices and market capitalization of potash fertilizer stocks in the capital market. Nutrien's stock Price has risen from $28.28 per share in July last year to $70 per share in October this year, reaching a high of $72.21 per share. Its market capitalization has also increased from $17 billion (equivalent to 110.5 billion yuan) to $40.9 billion (equivalent to 265.9 billion yuan), setting a new high since its listing, with an increase of 140%. Two other potash fertilizer producers, Mosaic (MOS.N) and Israel Chemicals (ICL.N), have shown the same upward trend, all exceeding historical highs.

         Although the global energy crisis that erupted this autumn has significantly increased the production cost of fertilizers, this negative impact mainly affects nitrogenous fertilizers and phosphate fertilizers. International giants such as BASF (BAS.DF), CF Industries (CF.N), and European fertilizer producer Yara (0O7D.L), which mainly produce nitrogenous fertilizers, have announced production cuts or shutdowns of ammonia plants used to produce nitrogenous fertilizers. However, the soaring energy Prices have a relatively small impact on potash fertilizer producers. Potash fertilizer is not as dependent on natural gas or coal as raw materials for its production, accounting for 70%-80% of its cost like nitrogenous fertilizer, nor is it a high energy-consuming industry like phosphate fertilizer. The production cost of potash fertilizer is mainly composed of material consumption, labor cost, and various depreciation and amortization. The proportion of energy costs such as natural gas, coal, and electricity in the production cost of potash fertilizer is relatively small. For example, the 2020 annual report of Uralkali (URKA.L) shows that its energy consumption accounts for 10.55%, while the 2020 annual report of Asia Potash (000893) (000893.SZ) shows that its fuel and power consumption is even lower, at only 8.41%. Therefore, the soaring energy Prices have little impact on its costs. This is also an important reason why the capital market favors potash fertilizer stocks among the three major fertilizer sectors.