Global Potash Power Play

Potash is any of the various mined and manufactured salts that contain potassium in water-soluble form. The global market share of potash was USD 8.0 Billion in 2016, expected to grow at a CAGR of 4.0% during the forecast period to reach a market size of USD 11.0 Billion by 2024. Potash demand is high in Asia-Pacific region mainly for the agricultural purpose. Major application of potash is in fertilizers followed by the pharmaceutical applications. Fertilizer industry uses over 90.0% of the total potash production. Major potash sites mined for the production are located in Canada (10,000 MT), Russia (6,500 MT), Belarus (6,400 MT), China (6,200 MT), Germany (3,100 MT), and more. The total demand of potash in 2016 was 32,628 million metric tons and the supply was 46,974 million metric tons in 2016.

Potash market has seen challenges in the year 2016 of oversupply of potash against low demand leading to price fluctuation. The collapse of Potash cartel, Belarusian Potash Company in mid-2013 gave an advantage to the North America potash cartel Canpotex. The fall in prices was due to over manufacturing of potash on the back of the investments in production expansion projects for much-demanded agricultural nutrients. But due to seasonal variations, the demand for fertilizers fell down in 2015. 

Geographically, India and China are two major consumers of the potash, consuming 1/3rd of the global production. China alone consumes 20.0% of the world total consumption of potash and is the 4th largest potash producer. The domestic manufacturing of potash in China supplied 2/3rd of its domestic potash demand. Both India and China had been seen disinterested in making spot price contracts to avail the lower prices opportunities. But in August 2016, China and India had established a deal with Uralkali without any major discounts on prices, to keep potash prices on a positive trend. 

Ethiopia is been intended to become the largest supplier of potash to India and China the biggest consumers in the future ahead. Ethiopian potash resources enjoy three key advantages first; Ethiopia has a strategic location near the Indian Ocean and can comparatively quick sail to both India and China. Second, Ethiopian potash reserves are expected to be the third largest globally after Canada and Russia and would be able to upkeep production of one million tons per year or even more. And lastly, Ethiopia has production advantage that it can recover dissolved potash by injecting water into the deposit, bringing the brine to a surface pond for evaporation, thus making the production process cost cheapest in the world.

With the falling prices the global leader of potash market, Potash Corp of Saskatchewan Inc., had closed some of the production units. Potash Corp of Saskatchewan Inc. has merged with Agrium Inc. in 2018 to form a new company Nutrien Ltd., trading on the Toronto and New York Stock Exchange, where shareholders received 0.40 Nutrien shares for each common share of Potash Corp they owned and 2.23 Nutrien shares for each Agrium share they owned.