Global Fertilizer Demand Strengthens on Policy Support & China’s Potash Market Closes 2025 Firmly and Opens 2026 on a Strong Note

Recently, the international fertilizer market has shown clear characteristics of concentrated demand release supported by government subsidy policies. Countries including India, Indonesia, and Nepal have actively advanced fertilizer tenders and procurement programs, while Pakistan recorded record-high fertilizer sales.

Against this backdrop, China’s potash market concluded 2025 at elevated but stable levels, and entered 2026 with continued firmness. Potassium chloride prices are supported by a tight supply–demand balance, whereas potassium sulfate remains trapped in a “stable price but loss-making” situation.

I. International Market

To safeguard agricultural production, many countries in South Asia and Southeast Asia have intensified fertilizer tenders and procurement activities, while stabilizing supply and prices through subsidy policies. Overall fertilizer demand remains robust.

(1) Tender and Procurement Dynamics in Key Countries

• India

  
  

  On January 2, fertilizer importer NFL received 26 bids for a total of 1.5 million tons of prilled and granular urea. Of this volume, 800,000 tons were requested for the west coast and 700,000 tons for the east coast, with shipment required by February 20 and bid validity until January 16.

  
  

  It is projected that India’s fertilizer subsidy for FY 2027 will reach INR 1.9 trillion. During the FY 2026 Rabi season, higher nutrient-based subsidy (NBS) rates are expected to benefit domestic NPK producers, while DAP importers may face profitability challenges due to high global prices and insufficient subsidy coverage.

  
  

• Indonesia

  
  

  The government has confirmed that in 2026, fertilizers such as urea and NPK will continue to receive a 20% price-discount subsidy. The Ministry of Agriculture has allocated 9.55 million tons of subsidized fertilizer for agricultural use, while the fisheries sector has received an additional 295,676 tons for aquaculture.

  
  

  PT Pupuk Indonesia has ensured inventory availability across its entire distribution network to guarantee smooth redemption of subsidized fertilizers by farmers.

  
  

• Nepal

  
  

  Import distributor KSCL has issued a tender for 30,000 tons of DAP, with a submission deadline of February 13. The tender is based on CIP delivery to designated warehouses, with a validity period of 30 days.

  
  

  Another distributor, STCL, is expected to complete a 25,000-ton DAP tender this month, with technical and financial bids due by January 9 and January 16, respectively.

  
  

• Bangladesh

  
  

  The Government Procurement Advisory Committee has approved fertilizer procurement proposals totaling 70,000 tons, including:

  
  

  • 30,000 tons of bagged granular urea from KAFCO (approx. BDT 1.9059 billion)

    
    

  • 40,000 tons of bulk granular urea from SABIC (Saudi Arabia) (approx. BDT 1.9059 billion)

    
    

    In addition, the import of 10,000 tons of phosphoric acid (approx. BDT 977 million) was approved, ensuring uninterrupted agricultural supply.

    
    

(2) Pakistan: Record Sales Driven by Spring Planting Demand

In December 2025, Pakistan’s urea sales reached 1.356 million tons, setting a historical record—up 37% year-on-year and 65% month-on-month.

DAP sales also surged to 800,000 tons, representing a 67% month-on-month and 42% year-on-year increase.

This strong growth was driven by manufacturer discount programs and spring planting stockpiling demand. By the end of December, national inventories declined to 315,000 tons of urea and 219,000 tons of DAP, highlighting robust demand from the agricultural sector.

II. China Market Update

China’s potash market concluded 2025 with prices remaining high but stable, and maintained firmness around the New Year period. A clear divergence persists between potassium chloride (KCl) and potassium sulfate (SOP)—the former supported by tight supply–demand fundamentals, while the latter remains under profitability pressure.

(1) End-2025 Performance: Stable Prices Supported by Tight Supply

Potassium Chloride (KCl)

Prices for port imports, border trade imports, and domestic potash from Qinghai remained stable at elevated levels. The key support factor is genuine supply tightness, characterized by seller reluctance and ongoing supply gaps.

Port inventories have recovered slightly to 2.45 million tons, still nearly 20% lower year-on-year. Improving international sentiment and unresolved supply pressure continue to support prices. Border trade contracts for January 2026 increased by USD 3/ton, reaching highs of USD 363/ton. Market participants generally believe short-term tightness will persist.

Potassium Sulfate (SOP)

SOP prices also closed the year at stable levels, but producers face severe challenges. Mannheim-process SOP producers are operating at full losses, squeezed by high KCl costs and sharply rising sulfuric acid prices.

Although producers are eager to raise prices to escape losses, weak demand, export constraints, and intensified domestic competition have resulted in a “stable but unprofitable” market, with little short-term relief in sight.

(2) Outlook for Early 2026: Continued High-Level Volatility, Limited Structural Change

Potassium Chloride

The KCl market is expected to remain firm at high levels. Demand remains solid, supporting port inventories around 2.45 million tons. On the supply side, additional volumes may be released following the completion of national reserve inspections, with shipments expected around the New Year period—improving supply expectations but offering only limited relief.

Internationally, new border trade contracts at USD 361/ton (up USD 3/ton month-on-month) provide cost support, while the shutdown of Canada’s K3 mine has reduced global capacity by 7.6%, reinforcing supply-side tightness.

Potassium Sulfate

The SOP market remains under pressure. Ex-factory prices for 52% Mannheim SOP powder are holding at high levels, but actual transactions are weakening. Downstream compound fertilizer producers face environmental production limits and slower agricultural stockpiling, resulting in insufficient demand and weak new order intake. Producers are increasingly forced into deal-by-deal pricing, with a persistent situation of “prices without volume.”

Overall Assessment

China’s potash market continues to operate under tight supply–demand conditions. While uncertainties remain regarding additional supply releases, the core drivers—international capacity contraction and differentiated domestic demand—remain unchanged. As a result, the high-price operating environment is unlikely to reverse fundamentally in the near term.

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.