International Market's Impact On China's Potash Prices And Transmission Mechanism

Potash is an important resource for agricultural production.It is one of the three major fertilizers in agriculture.It is also one of the most shorted mineral resources in China.The supply is in serious shortage.The demand for potash amounting to 40-50% depends on imports from other countries outside China,and the rate is on the rise.This research aims to explore how the international potash market price established,how international potash market and domestic market interact with each other,what are the factors affecting China's potash import price,which are important for national agriculture development and food safety,as well as the transmission mechanism and path from international market to domestic potash price.This research is significantly important and would put forward suggestions for policy makers.The research results and major contributions of this paper focus on the following points:(1)This paper classifies the factors impacting the price of potash import,and constructs a analysis framework for potash import,covering supply factors,demand factors and comprehensive factors.It shows that,production cost,international transportation and general production impact international potash price heavily from the supply side,while international potash price,towner income level and CPI impact domestic potash price heavily from the demand side.(2)Based on the principle of space integration and path analysis,this paper uses Granger causality test and cointegration analysis method to reveal the international potassium salt price transmission path.The findings of this paper is that there is a very significant "price co-shift" feature in the international potash market,and the international potash price has one-way transmission path.The transmission is from export to import,from international market to domestic market,and it has long term support to the law of one-price.(3)This paper demonstrates the influencing factors of the imported potash price from multiple perspectives,and establishes theoretical analysis framework to explore exchange rate's impact on potash import price,as well as exchange rate elasticity measurement.It also constructs the bargaining power measurement model for imports and exports.It finds that information asymmetry affects price decisions greatly and potash exports countries have stronger bargaining power.Based on the research conclusions and the actual situation of China's potash industry,this paper puts forward relevant suggestions and measures for China's international potash trade policy and the sustainable development of China's potash industry.