Changjiang Securities·2025-12-14 11:25Investment Rating - The report maintains a "Positive" investment rating for the industry [8] Core Insights - The U.S. announced the lifting of sanctions on Belarusian potash fertilizers, aiming for normalization of relations with Minsk, which may have limited direct impact on global potash supply-demand balance [2][6] - Potash demand remains strong while supply growth is limited, indicating a favorable outlook for the industry [2][12] - Key companies to watch in the potash sector include Yara International, Salt Lake Potash, Oriental Tower, and Zangge Mining [2] Summary by Sections Event Description - On December 13, 2025, U.S. Special Envoy John Coale met with Belarusian President Alexander Lukashenko, announcing the lifting of sanctions on potash fertilizers [6] Market Dynamics - The price of cyclical products is primarily determined by supply and demand rather than costs. The lifting of sanctions by the U.S. is not expected to significantly alter the global potash supply-demand balance but may reduce Belarusian potash costs [12] - Belarus is the third-largest potash producer globally, with a market share of approximately 16%. Sanctions in 2022 led to a significant reduction in supply and a surge in global potash prices [12] Supply Recovery - Belarusian potash production, which fell to 5.408 million tons in 2022 due to sanctions, has been recovering, reaching 11.559 million tons in 2024, close to its historical peak of 13 million tons in 2021 [12] - The lifting of U.S. sanctions is expected to have a limited overall impact, as Belarusian potash costs remain high due to ongoing EU and Lithuanian sanctions [12] Demand Outlook - The demand for potash is expected to remain robust, driven by high prices of phosphate and nitrogen fertilizers, with potash prices being competitive [12] - In the first half of 2025, potash exports from Canada, Russia, and Belarus increased by 26%, 5%, and 18% respectively, indicating strong demand [12] Capital Expenditure and Supply Constraints - The potash industry has seen limited capital expenditure due to prolonged periods of low prices, leading to constrained future supply growth [12] - The cyclical nature of the industry means that prices are more influenced by supply-demand dynamics than by production costs [12]