The Integer View 21 April 2017 - Chinese Concentrated Solar Power Development; Potash Production Begins; China Sulphur Production Outlook - Integer
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The Integer View 21 April 2017 – Chinese Concentrated Solar Power Development; Potash Production Begins; China Sulphur Production Outlook

Posted On: 21-04-2017 By: Grahame Turnbull

Chinese concentrated solar power development to push potassium nitrate consumption up

By Lynn Wang – Research Manager based in China

Concentrated solar power (CSP) systems which use concentrated sunlight to run steam turbines have been receiving a lot of attention in recent years as a potential low cost alternative to photovoltaic cells. Molten salt is used both as a heat transfer fluid as well as a medium for thermal energy storage. There is significant growth in the number of CSP stations in the world at present, which consume about 650,000 tonnes of molten salts.

In China, the CSP market has been booming. New CSP capacity reached 10.2MW in 2016, adding 40,800 tonnes of molten salts consumption, including 16,320 tonnes of potassium nitrate. According to the Chinese 13th Five Year Plan, domestic CSP capacity will reach 5GW by the end of 2020, which means that the molten salt consumption would increase to about 3 million tonnes, of which, potassium nitrate consumption will be about 1.2 million tonnes, equivalent to 900,000 tonnes of MOP demand. The demand is one-off rather than recurring, since the salt is effectively recycled, but it is still substantial.

Although there are hundreds of molten salt formulas, the mainstream formula is the mixture of 60% NANO₃-40% KNO₃. SQM, Haifa, BASF and Yara are leading suppliers in this field. In China, molten salts companies expanded very quickly. Zhejiang Lianda is the first producer with 200,000 tpy of potassium nitrate capacity. Its molten salts have been used for the CSP station in Delingha, Qinghai province. In addition, Qinghai Salt Lake group, Sinkiang Nitrate Minerals, Wentong and Bingcheng Fertilizer have all developed potassium nitrate capacity for molten salts.

Read more on Integer’s Potash Market Service, SOP Outlook Report or our Fertilizer Country Profiles, covering Sub-Saharan Africa and Latin America.

Potash production begins in Turkmenistan

By Rebecca Hayward – Lead Potash Analyst

New greenfield mines open once in a blue moon in the potash industry, but 2017 is a year of plenty with three new greenfield mines set to come online this year. The first to appear on the potash scene is Turkmenhimiya’s Garlyk mine which was officially inaugurated on 31 March by Belarus President Alexander Lukashenko and Turkmenistan President Gurbanguly Berdimuhamedow.

The Belarusian built mine (by Belgorkhimprom) in Lebap region of Turkmenistan has a capacity of 1.4 million tpy, of which 1.2 million tpy is due to be exported. Turkmenistan is an arid country with little cultivable land, and agriculture is almost entirely dependent on irrigation. It is not clear which export markets  will be targeted, given the relatively remote mine location.

It is not clear yet whether Belarusian Potash Company (BPC) will handle exports but due to the close links between Belarus and the Turkmen state on this project, this seems likely. Turkmenistan has opened an international bid process for a second mine at the Karabil potash deposit with an estimated capex of $1.4 billion and similar size capacity.

The latest news from the second new entrant, K+S, is that 600,000-700,000 tonnes will be produced from Legacy in 2017 starting in Q2 (100,000 tonnes of which is due to go to stocks). EuroChem is advancing two potash mines, Usolskiy and Volgakaliy with combined capacity of about 8.4 million tpy as part of its vertical integration strategy to become self-sufficient in raw materials. EuroChem’s first mine and third entrant to the potash industry this year, Usolskiy, is due to produce by the end of 2017. Initially the new mines will be used to feed the company’s complex NPK fertilizer production and will likely supply other customers from 2020, although the effect on the global market will still be felt by the displaced potash volume that EuroChem is currently buying from other potash suppliers.

Potash prices have strengthened in recent months as the market has moved more in to balance. Demand will continue to grow steadily, but beyond 2017 it remains to be seen if it will keep pace with new production as the greenfield mines ramp up volumes. For detailed analysis and explanation as to how we see the emergence of new mines impacting the potash balance and prices in the medium term, please refer to the Potash Market Service.

How will China’s 8% share of global sulphur production develop in the outlook?

By Meena Chauhan – Sulphur and Sulphuric Acid Research Manager

China is the leading consumer of sulphur worldwide, with demand across fertilizer and other sectors in 2016 representing over a quarter of global consumption. Changes to China’s local consumption is a major consideration for the global sulphur balance due to the size of its import requirement. In recent years, China’s sulphur imports represented over a third of global trade, averaging 10-12 million tonnes per year, maintaining significant influence on global benchmarks. Due to the significance of trends in China on international markets, Integer Research has produced a spotlight report on China, answering key questions on the future direction in this leading sulphur market.

The growth in energy production in China over recent decades across the oil and gas sector, has boosted domestic sulphur recovery. Despite the growth in domestic hydrocarbon production, the country has still moved from being a net exporter of oil and gas to the second largest importer of oil globally. Developments in the Sichuan province have, for instance, led to a significant increase in sulphur production capacity – due to the levels of hydrogen sulphide (H2S) content in the gas fields. There are thirteen oil and gas projects currently active in China, which are due to come online in the period to 2021, expected to impact local supply. We estimate an increase of 72% in China’s sulphur production in the next five years – and this raises questions on whether imports will remain as strong as they currently are. There is also a question mark over future demand growth rates in the country, as we forecast limited capacity additions in the fertilizer sector. Growth rates are expected to see a slowdown, again impacting the balance for sulphur imports. Any downturn in China’s import requirements could have significant impact on international trade and pricing.

Taking a look at China’s import supply sources, there have been major fluctuations among most of its main suppliers across the Middle East, North America and the FSU. Saudi Arabia has maintained the top spot for many years, but recently, significant strides have been seen in supply from the UAE, whose market share has risen from just 4% in 2014 to 15% in 2016.

Additional article: Integer research also released a related article entitled Global Sulphur demand: How will China’s 27% share of consumption develop? to see this article click here >>

New Report – Chinese Sulphur: For more information on Integer’s Chinese Sulphur spotlight report, and how the analysis and supporting data it provides can support your decision making, please click here.

Watch Sulphur Webinar Recording: to watch a recording of our recent sulphur market outlook webinar, Click here.

Read more on Integer’s Sulphur Market Dynamics Service, Sulphur Quarterly Insight, or our Spotlight Report – Chinese Sulphur.

We hope you found this week’s digest of interest, please do not hesitate to contact our analysts with any thoughts or queries. 

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