The US potash market will be affected by the volume of canceled imports from Belarus, the company Intrepid Potash noted.
A change in the volume of imports could result in a substantial change in potash prices in the United States.
Sanctions on Belarusian potash imports were recently announced and are expected to take effect in April 2022.
Belarusian potash has accounted for approximately 7% of annual demand in the United States.
Intrepid Potash expects other suppliers to increase their import volume in response to the sanctions, although the timing of these changes and the overall effect of the sanctions on the potash market are uncertain.
By way of explanation: Potash, specifically muriate of potash (MOP), is a potassium-rich salt that is primarily used as a fertilizer to improve the quality and yield of agricultural produce. MOP can be used directly as a fertilizer, combined with other important nutrients, or converted to other forms of potash.
The world potash market has long been characterized by nominal production capacities that exceed demand.
Furthermore, a significant part of this capacity is controlled by a few companies and this concentration increased in early 2018 with the merger of two Canadian producers.
Historically, these large producers have managed production levels to approximate world demand.
Also several international brownfield and greenfield expansions have started production, and increases in production rates are expected over the next several years.
Due to increased production, the near-term potash price is likely to depend on the ability of larger producers to continue to manage this balance between supply and demand through reduced utilization rates.
Intrepid Potash anticipates that increases in global demand for fertilizers, due primarily to population growth and limitations on arable land, will ultimately ease the burden on producers, although recent increases in production capacities and continued progress in Key expansion projects, specifically BHP‘s approval of the Jansen Stage 1 potash project, add additional uncertainty to the long-term supply-demand balance for the potash market.
Virtually all of the world’s potash is currently mined from 19 commercial deposits.
According to the International Fertilizer Industry Association and data published by potash mining companies, six countries accounted for approximately 88% of total global potash production during 2020.