Asia-Potash(SZ:000893)2022-11-19 02:32Market Outlook - The potash market is expected to remain in a sustained high cycle over the next two years due to supply-demand dynamics [2] - Belarus and Russia account for nearly 40% of global potash production capacity, with significant reductions expected due to the ongoing Ukraine conflict and sanctions [2] - Global potash supply is projected to decrease by 6-8 million tons this year, with Belarus expected to cut production by 6-8 million tons and Russia by 2-6 million tons [3] Demand Factors - Global grain inventories are at historical lows, with major agricultural prices (soybeans, corn, wheat) rising by 50%-90% compared to the 10-year average [3] - High agricultural prices are expected to support fertilizer demand, as farmers are incentivized to plant more due to favorable price coverage [3] Sales Model - The company employs two main sales models: EXW (Ex Works) and CFR (Cost and Freight), affecting the timing of revenue recognition [3] Cost and Expansion - The operating cost per ton in 2021 was 825 RMB, with expectations for cost reduction as production scales up [3] - The second million-ton project is expected to be completed by the end of 2022, and the third by the end of 2023, with fixed asset investment for future projects reduced to approximately 4 billion RMB [4] Transportation Capacity - The company does not foresee transportation bottlenecks post-expansion, with existing road infrastructure capable of handling up to 3 million tons of potash [4] - Ongoing infrastructure projects, including a new highway and railway, will enhance transportation efficiency and capacity [4] Impact of COVID-19 - Recent adjustments in Laos' pandemic policies have positively impacted production and sales, with international ports fully reopened [5] - Domestic sales are experiencing delays due to port unloading and customs clearance, but the company is actively seeking solutions [5]