In the first half of 2023, the market price of potassium hydroxide fell overall. The decline in prices in the fourth quarter of 2022 continued in the first quarter, in particular into may, when potassium hydroxide entered a rapid decline of more than $1,000 per ton in one month, and by late june prices showed signs of bottoming, with the whole potassium hydroxide being vulnerable. Ninety per cent of the market for potassium hydroxide in solids fell from around 8,500 yuan/tonne at the beginning of the year to around 6,200 yuan/tonne at the end of june. Specific price trends are shown in the january-june 2023 market-off price curve for potassium hydroxide in salt lake news。
The potassium hydroxide market is affected by multiple factors
01 cost aspects
The main raw material in the production cost of potassium hydroxide is potassium chloride, which accounts for between 50 and 70 per cent of the cost of potassium hydroxide, and where electricity consumption, steam consumption, man-made packaging, etc. Have been generally stable for a certain period of time, so that the rise and fall in potassium chloride directly affect the production cost of potassium hydroxide。
As the russian-uu war led to a shift in the global supply of large quantities of raw materials, international energy prices, especially natural gas, fell sharply, leading to lower prices of major fertilizers urea, leading to lower prices on the market for potassium chloride, lower market expectations for potassium chloride, higher and lower sales by individual potassium chloride distributors, an expected bottom-down decline in the price of potassium chloride, and the clearing of stocks by individual potassium hydroxide producers, which led to a downward trend in the price of potassium hydroxide in the first half of this year, particularly with the completion of the trade negotiations in may, which is expected to have a significant fall in transaction prices, with more than 1,000 yuan/t in may。
In the first half of the year, the price of potassium chloride fell by about $1,100 per ton, while the price of potassium hydroxide fell by about 2,300 per ton, and the decline in potassium hydroxide fell by far more than the cost decline caused by the fall in the price of potassium chloride。
As the price of potassium chloride imported was finalized on 7 june, the price of potassium hydroxide fell first from liquid products, followed by a sign of solid potassium hydroxide bottoming in late june, when the “foots” of potassium chlorinated raw materials fell。
02 supply side
Potassium hydroxide production enterprises have been affected by higher levels of maori production over the past year, and some are more likely to expand. Although prices have been falling since january this year, the fall in the price of potassium hydroxide in the production enterprises during the first quarter of this year could be offset largely by a decrease in the cost of potassium chloride, with higher levels of māori in the production enterprises, a quarter of which is largely full-load production, adequate social supplies, and a smaller proportion of market price increases that are less responsive to slower stock increases。
The entry into the second quarter of the year was marked by the emergence of a situation in which the supply of and demand for potassium hydroxide products from all enterprises became fully marketed, the pattern of full competition led to a rapid decline in prices, the rise in stocks in all enterprises producing potassium hydroxide, a sufficient level of competition in the bad markets in the second quarter, the forced reduction of loads or the introduction of stoppages in some enterprises, combined with the low prices of pvc prices and losses in chlorine products during the same period, leading to losses in the main enterprises producing potassium hydroxide into june and a decline in the start-up rate for the entire industry。
03 downstream industry
Owing to the global economic downturn and under-consumption, potassium hydroxide not only declined in its own exports, but also in its downstream exports, as well as higher prices in the preceding period, which were hampered by the collapse of international and domestic prices of processed downstream products; the rapid decline in prices in the international domestic market for potassium chlorinated raw materials, which led to the purchase of all potassium downstream processing products, such as potassium hydroxide, potassium carbonate, potassium phosphate, potassium phosphate, potassium permanganate, potassium permanganate, potassium permanganate, and potassium permanganate, as well as production enterprises such as dyes, pharmaceuticals and pesticide intermediates, all of which, owing to the manufacturing cycle, were purchased at high prices, resulting in lower prices of products after the processing cycle, which resulted in the production of potassium hydroxide from various downstream productions not being stockpiled, and the purchase of stocks for the traditional guarantee of a certain level of safety and stability of production. Added to high-end fertilizers are the two main downstream industries of potassium phosphate and potassium hydroxide, which are too high in market terms to allow farmers to absorb high-cost product costs and adopt alternatives, thereby reducing market consumption, resulting in a boom in the traditional consumption season of phosphate dihydrogen and potassium hydrate in the first quarter of this year。
A small increase is expected in the fourth quarter
The market for potassium hydroxide is expected to be vulnerable in the second half of 2023 in the short term, with a small upward adjustment for potassium hydroxide entering the fourth quarter。
In terms of the cost of potassium chloride for the main feedstocks, there was less room for a further fall in the price of potassium chloride in the second half of the year, which, in terms of cost, supported the fact that the price of potassium hydroxide would not fall in the first half of the year。
From a peer analysis of potassium hydroxide, there are different problems with the cash flow of each of the loss enterprises as a result of the current large-scale losses in the production enterprises, and the reduction, overhaul, conversion and even short-term shutdown of production in each of the loss enterprises in the three quarters is inevitable and the supply of potassium hydroxide will not increase in the short term。
At the downstream demand level of potassium hydroxide, as the price of potassium hydroxide is currently low, manufacturing costs for downstream enterprises will be reduced, thus increasing consumption in some downstream markets. Social stocks are gradually transferred from potassium hydroxide producers to distributors and downstream enterprises, where prices are stable。
The market price for potassium hydroxide is expected to be the lowest in the second half of the year in the first half of the three quarters, followed by a small upward trend, with prices remaining at between $6,000 and $7,000 per ton in the second half of the year。
