Trade data and financial reports are still being released, but our preliminary estimate of MOP deliveries stands at 62.3Mt. This far exceeded our expectations: it is 17% higher than 2013, 13% higher than the previous record set in 2011 and 10% higher than we forecast six months ago. So why did demand outperform our expectations by so much? And, is this level of demand sustainable?
Of the 5.5Mt of "additional" tonnage, over half is due to China. MOP deliveries in China are estimated at 14.6Mt, up a remarkable 30% on the previous year. Domestic production took another big step forward as new plants at QSL Potash and Zangge Potash were ramped up, and the practice of operating for most of the winter became more widespread. Moreover, domestic producers sold further quantities from inventory so domestic sales were close to 7Mt. We had expected that record domestic production would temper the need for imports in H2 and that by Q4 imports would have tapered off in anticipation of new contracts in early 2015. Yet, with cargoes continuing to be shipped at the HI contract price, imports were actually higher in the second half of the year, finishing at 7.7Mt - their highest level since 2007. We consider the Chinese puzzle further in a special focus that follows this Executive Summary.
Demand was weak in Q4 2013 as buyers waited for clarity on prices and stocks were re-filled in Q1 2014 after China agreed a new deal that set a floor under tumbling prices. Further inventory build took place in Q4 2014, particularly in the United States where buyers fear a repeat of last year's railway bottlenecks that disrupted supply ahead of spring planting, but also elsewhere on the expectation of a higher China contract price in the New Year. Buyers' inventories of MOP are extremely difficult to establish (we take the view that inventories have risen in Brazil, India and China but by no more than 2 million tonnes in total), but they certainly don't account for all that extra demand.
Lower potash prices are another obvious reason for higher consumption, but crop prices have been falling too, and on average MOP was only slightly more "affordable" than it was in 2013. This isn't the case everywhere though - in China, where staple crops are subject to support pricing, potash became a lot more affordable and consumption rose sharply as a result. But the big remaining factor behind 2014's performance is stability. China and India imported at the same price all through the year without lengthy contract negotiations to disrupt buying patterns. Spot market prices rose only modestly through the year and benign weather conditions meant that farmers could apply potash without disruption.
Although there does not appear to have been large-scale inventory build-up in 2014, we are forecasting demand to shrink in 2015 in response to lower grain and soyabean prices, as well as inventory drawdown. Having just emphasised the benefits of stability to potash volumes, the fact that a new China contract price has not been settled yet is a concern and is likely to curb Ql volumes not just in China but globally. Nevertheless we predict MOP deliveries to still top 60Mt this year, their second highest ever.

Executive Summary 1

Focus: China's remarkable 2014 9

Chapter 1 - Demand 15

1.1 Overview of Potassium Chloride Demand Outlook 15

1.2 Recent developments in agriculture markets and implications for potassium chloride demand 19

      1.2.1 Recent agricultural market developments 19

      1.2.2 Short and medium term considerations 22

      1.2.3 Implications for potassium nutrient demand 23

1.3 Regional assessment of demand 26

      1.3.1 North America 27

      1.3.2 South & Central America 30

      1.3.3 Europe & CIS 33

      1.3.4 Asia 35

      1.3.5 Oceania 40

      1.3.6 Africa 41

      1.3.7 International Trade in Processed KCI 43

      1.3.8 Non-Fertilizer Demand 45

Chapter 2 - Supply 47

2.1 Overview of Potassium Chloride Supply Outlook 47

2.2 Production & Sales 51

2.3 Regional Assessment of Potassium Chloride Capacity 54

      2.3.1 Introduction 54

      2.3.2 Historical review 55

      2.3.3 Firm Capacity Additions 59

      2.3.4 Other Projects Under Development 72

Chapter 3 - Trade, Balance and Prices 83

3.1 Trade 83

      3.1.1 Overview 83

      3.1.2 Exports 85

      3.1.3 Imports 87

      3.1.4 Ocean Freight 91

3.2 Market Balance 92

      3.2.1 Supply Forecast 93

      3.2.2 Demand Forecast 94

      3.2.3 Outlook for Market Balance 96

3.3 Prices 100

      3.3.1 FOB Netbacks 101

      3.3.2 Contract Markets 103

      3.3.3 Spot Markets 105

      3.3.4 Price Forecast 108

      3.3.5 Price Drivers 110

Appendix A - The Long Term Outlook to 2039 117

A.1 Introduction 117

A.2 Outlook for long-term demand 118

A.3 Outlook for long term supply 126

A.4 Determining a long term trend price for potash 128

      A.4.1 Introduction to LRMC 128

      A.4.2 Selection of the long run marginal producers 128

      A.4.3 Methodology for calculating the LRMC 132

      A.4.4 Escalation of the LRMC 133

A.5 Risks to the outlook 135

Appendix B - Industrial and economic outlook, 2015-2019 137

B.1 Overview 137

B.2 Exchange rates 142

B.3 Macroeconomic outlook 144

B.4 Scenario 153

Appendix C - Potassium Chloride Deliveries, 2011-2019 157

Appendix D - Potassium Fertilizer Consumption, 2011-2019 161

Appendix E - Potassium Chloride Capacity 2011-2019 165

Appendix F - International Trade in Potassium Chloride, 2014 169

中国化工信息中心