Southeast Asia's potash demand outlook is mixed this quarter, despite price clarity and stability to the market provided by India's MOP contract settlement last week.
India's contract settlement at $422/t cfr with 180 days' credit for deliveries from April to September has provided a benchmark for prices in southeast Asia at least until September, with a lack of clarity in the region previously before this deal. This has led to increased confidence among buyers in southeast Asia.
Producers are likely to offer standard MOP cargoes to southeast Asian importers at a $20-30/t premium over the India contract price of $422/t cfr for second-quarter loading. A major supplier has reported sales of standard MOP to the region at $450/t cfr this week, and indicated granular MOP prices to Thailand and Vietnam in the range of $480-500/t cfr for second-quarter shipment.
But most market participants do not expect imports to the region to ramp up in the short term, as importers still have high carryover stocks from last year and will continue to focus on liquidating these stocks in their domestic markets, instead of purchasing new cargoes.
Buyers in domestic markets across southeast Asia are also not expected to significantly increase their purchase volumes in the second quarter to make up for the weak buying in the first quarter, especially from Thailand and Vietnam, where MOP inventories are still high, importers said.
But plantations in Indonesia are likely to start calling for tenders from late April after the Islamic fasting month of Ramadan, which might provide some support to MOP prices in the region. On the other hand, some buyers prefer to remain on the sidelines as they anticipate prices to continue on a downward trend.
Southeast Asia is a major potash-consuming region, taking around 8.21mn t in 2022 or 16pc of global imports, according to trade data on GTT. Much of the potash demand in the region is sustained by palm oil plantations in Indonesia and Malaysia, which are global leading palm oil exporters.
