LONDON, Nov. 12, 2019 /PRNewswire/ -- After the surge in Chinese potassium sulphate (SOP) exports in Q2 – led by Iranian demand – exports in the third quarter of 2019 slowed. Nevertheless, traders were able to maintain remarkably consistent SOP exports through Q3, averaging around 25,000 tonnes a month.
CRU understands that increasingly aggressive pricing offers made by traders have facilitated the strong export volumes, with some reports indicating prices as low as US$ 370/t FOB. This behaviour shines a light on the background of weak domestic fertilizer demand in China in 2019. Domestic SOP prices have fallen throughout the year as increasing nutrient use efficiency across the country finally impacts potash demand, forcing traders to seek ever smaller arbitrage opportunities overseas.
Chinese exporters delivering more into established markets
During Q2 2019 Iran provided a surprise outlet for more than 100 kt of Chinese SOP, despite the country remaining under US-led sanctions since late 2018. This volume essentially represents Iran's entire annual SOP import requirement and Chinese traders have delivered no further cargoes of SOP to the Middle Eastern nation since June.
Despite this, China has continued to export SOP at a consistent rate of around 25,000 tonnes a month throughout Q3. This means that in the first nine months of 2019, according to China Customs data, SOP exports reached 279,000 tonnes, more than double the previous highest annual total in 2016.
Outside Iran, Chinese SOP export destinations are geographically widespread and fragmented with only four other countries – Chile, Mexico, Myanmar and South Africa – receiving more than 15,000 tonnes each by the end of September. Some of the larger import markets of Chinese SOP slowed during Q3, but traders have proven to be highly reactive, diverting volumes to smaller markets to maintain output levels.
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