The prices of potash (K2O) globally are likely to remain range-bound at USD 200-300 per tonne in the short to medium term, despite the likelihood of a higher rise in global potash capacity (4.0% CAGR for the period 2015-2020) than that in global potash demand (2.2% CAGR for the period 2015-2020), opines India Ratings and Research (Ind-Ra).
Potash is used as a fertilizer, primarily in the form of muriate of potash (MOP). According to the Food and Agriculture Organization of the United Nations (FAO), global potash demand, which was 32.8 million tonnes (mt) in 2015, is likely to increase at a CAGR of 2.2% during 2015-2020. The increase is in view of the FAO’s expectations of a 5.2% rise in potash demand in South Asia, primarily India, followed by East Asia, primarily China (1.83%) and Latin America, primarily Brazil (3.09%). India will continue to import 100.0% of potash as it does not have any significant domestic reserves.
Meanwhile, the global potash capacity, which was 52.9mt in 2015, is likely to expand at a 4.0% CAGR over 2015-2020, driven by an 8.1% higher capacity in East Europe and Central Asia (primarily Russia), a 3.2% higher capacity in North America (primarily Canada) and a 4.9% higher capacity in East Asia.
