China Fertilizer Market Analysis: Diverging Raw Materials, Policy-Led Stability in Phosphates, Potash Prices Holding Firm at High Levels

By late December, China’s fertilizer market has exhibited clear structural characteristics. On the raw material side, sulfur shows a pattern of domestic price pullback alongside high-level volatility in imported material, while phosphate rock, sulfuric acid, and synthetic ammonia remain broadly stable.

The phosphate fertilizer market continues to implement policy-driven supply assurance and price stabilization, with prices remaining steady despite rising cost pressure.

The potash market maintains a tight supply–demand balance, with potassium chloride prices holding firm at elevated levels, while potassium sulfate faces a dual squeeze of cost inversion and weak demand.

Overall, the industry continues to operate around two core themes: policy-led supply assurance and ongoing supply–demand competition.

I. Raw Material Markets: Divergent Trends Driven by Policy and Supply–Demand Dynamics

Key raw material markets are showing differentiated performance. Phosphate rock, sulfuric acid, and synthetic ammonia remain stable, while the sulfur market displays a clear divergence between domestic and imported material.

Overall supply–demand conditions are relatively balanced, with policy regulation remaining a decisive factor.

(1) Phosphate Rock: Supply Constraints Persist, Prices Stable with Support

The phosphate rock market remains generally stable, with strong pending orders at mines and no significant easing of supply constraints.

Regionally, shipments from Sichuan to Hubei remain adequate; outbound volumes from Guizhou are still limited; Hubei continues to face restrictions on external sales due to mining quota controls; and supply increases in northern regions remain limited.

On the demand side, downstream phosphate fertilizer producers are affected by environmental inspections and elevated sulfur prices. Some smaller producers have entered maintenance shutdowns, leading to lower overall operating rates. However, this has had limited impact on phosphate rock demand, providing support for stable prices.

The imported phosphate rock market is operating steadily. Chinese buyers are purchasing on an as-needed basis, with major procurement concentrated among companies in southern China and along the Yangtze River. It is reported that one vessel from Jordan and two vessels from Egypt are expected to arrive at Chinese ports, which may provide limited supply supplementation in certain regions.

(2) Sulfur: Domestic Price Pullback and Imported Volatility, Inventories Edge Lower

The sulfur market shows a clear pattern of domestic price correction combined with high-level volatility in imported sulfur.

Sulfur inventories at China’s major ports are estimated at approximately 2.08 million tons, slightly lower than the previous week.

On the supply side, imported sulfur arrivals in January are limited, and importers remain cautious in procurement. Tight availability of imported material is expected to persist. Meanwhile, domestic sulfur prices have retreated, creating a noticeable divergence from the imported market.

On the demand side, downstream sectors are currently in a seasonal demand peak, and the sulfur market has entered a seasonal destocking phase. Overall market sentiment remains firm with narrow price fluctuations. Notably, policy direction continues to be the key determinant of sulfur price trends in China.

(3) Sulfuric Acid: Generally Stable with Minor Adjustments, Regional Supply–Demand Differences

Sulfuric acid prices in China are generally stable with minor adjustments. Following the conclusion of fertilizer supply assurance meetings, policy guidance has provided support to the market, and prices in most regions have remained stable.

In the short term, the sulfuric acid market is expected to remain largely stable. However, due to differences in regional supply capacity and transportation conditions, supply–demand balances vary by region, and localized adjustments will continue based on regional fundamentals.

(4) Synthetic Ammonia: Volatile Consolidation, Regional Differences Persist

The synthetic ammonia market is undergoing a phase of volatile adjustment. In the near term, the market is expected to focus on stable-price shipments, with only narrow price adjustments possible in some regions.

Due to transportation radius constraints, price differentials between regions are expected to persist.

II. Phosphate Fertilizer Market: Supply Assurance and Price Stability Implemented, Costs Remain Under Pressure

Phosphate fertilizer prices remain stable, with the effects of supply assurance policies continuing to materialize as producers progressively execute order shipments.

Cost pressure remains evident. Sulfur prices are consolidating at high levels, and ongoing environmental inspections continue to affect MAP and DAP production. As a result, overall operating rates at MAP and DAP producers remain below 50%, with production constrained by both cost pressure and policy requirements.

III. Potash Market: Tight Supply–Demand Balance Continues, KCl Firm While SOP Remains Weak

China’s potash market continues to operate under a tight supply–demand balance, with prices holding firm at elevated levels and spot availability remaining limited. Both imported and domestic supplies are supporting the high-price environment.

In contrast, the potassium sulfate market remains weak, trapped in a dual dilemma of high costs and weak demand, resulting in thin trading and price inversion.

(1) Potassium Chloride (KCl): Structural Supply Shortages Support Firm Prices

The core issue in the KCl market is a structural supply shortage, which continues to support prices at high levels.

On the supply side, imported arrivals remain insufficient, port inventories are relatively low, and supplies are highly concentrated, limiting freely tradable volumes. Although border trade volumes are gradually crossing into China, most have been pre-sold, and new supplies have yet to arrive. Traders are therefore relying mainly on pre-sold forward cargoes, further tightening spot market conditions.

Domestic major producers are maintaining high operating rates with stable official prices, but shipment performance remains weak and arrivals in various regions are limited, pushing market transaction prices higher.

On the demand side, conditions are weak but not absent. Downstream plants generally maintain low operating rates due to policy pressure, yet some continue small-lot purchases to replenish insufficient inventories, providing limited demand support.

Overall, KCl transactions remain at high price levels but are dominated by small-volume deals, reflecting cautious market sentiment.

In addition, the KCl market shows three notable characteristics:

1. Strong cost support: Elevated phosphate fertilizer prices and the recent rebound in urea prices provide indirect cost support for KCl. Downstream raw material inventories are generally low, and rigid demand limits downside price momentum.

   
   

2. Clear regional price differentials: Prices in northern China are slightly higher than in the south due to transportation costs and concentrated demand. Trader offers remain firm, with limited room for short-term correction.

   
   

3. Persistent tight supply expectations: Domestic potash production may face noticeable reductions due to winter conditions. Combined with insufficient import arrivals and limited tradable inventories, supply–demand tensions may intensify further. Pre-sold cargoes are expected to enter circulation gradually after the New Year holiday.

   
   

(2) Potassium Sulfate (SOP): Cost Inversion and Weak Demand Create Severe Pressure

The potassium sulfate market is performing significantly weaker than KCl and remains trapped between high cost pressure and weak demand.

On the supply side, Mannheim SOP producers have largely maintained previous offer levels, but new order activity is sluggish and negotiation space has widened slightly in some regions. High prices of raw materials such as KCl and sulfuric acid have led to severe cost inversion. Although sulfuric acid prices have shown limited policy-driven fluctuations, cost relief remains minimal. Most producers are operating at minimum load levels, with average operating rates around 45%.

Resource-based SOP producers maintain relatively stable operating conditions with steady official prices. However, trader quotations vary by region and are generally below Mannheim SOP levels, reflecting cautious market expectations.

On the demand side, downstream compound fertilizer producers are recovering operating rates only slowly, with limited purchasing interest. New transactions are mainly small, rigid-demand orders, while large-volume follow-ups remain scarce. Agricultural demand is in the off-season, winter stocking volumes are limited due to high prices, and industrial demand has declined under environmental production restrictions. Some Mannheim producers have attempted to exchange price for volume, but with limited success.

IV. Short-Term Market Outlook: Stability as the Main Theme, Differentiation to Persist

In the short term, China’s fertilizer market is expected to remain generally stable, with differentiated trends continuing:

1. Raw materials: Phosphate rock, sulfuric acid, and synthetic ammonia are likely to remain stable. Sulfur prices are expected to fluctuate narrowly at high levels under the combined influence of seasonal destocking and policy guidance. Imported phosphate rock arrivals may provide limited local supply supplementation.

   
   

2. Phosphate fertilizers: Supply assurance and price stabilization policies will continue to dominate. Prices are expected to remain stable, while operating rates may stay low under cost pressure and environmental constraints. Attention should be paid to the pace of winter stocking demand.

   
   

3. Potash: High KCl prices are expected to persist. The circulation of pre-sold cargoes after the New Year may ease some tightness, but domestic production cuts and insufficient import arrivals will continue to provide long-term price support. The SOP market will need a recovery in demand, and in the short term, cost pass-through remains difficult, with any price upside dependent on a meaningful recovery in compound fertilizer operating rates.

   
   

Downstream buyers are advised to procure on a demand-driven basis, while traders should manage inventories cautiously, with particular attention to domestic potash production cuts, import arrival volumes, and the recovery pace of compound fertilizer operating rates as the three key variables.

Attention: The above information is for commercial reference only due to the diversity of information collected, and Kelewell is not responsible for the authenticity of the data.