In early Sept. 2016, China's peak demand
season for phosphate fertilisers in autumn began. Demand for phosphate
fertilisers increased in North and Central China. However, the transaction
volume was not high, according to some distributors.
Source: Baidu
- Monoammonium phosphate (MAP)
The average quotation for 55% MAP powder was USD249/t (RMB1,660/t). Compound
fertiliser manufacturers purchased small volumes of MAP because their operating
rates were only about 50%.
However, the slight increase in prices of raw materials such as sulphur and
liquid ammonium and the recovery in the foreign market (distributors in Latin
America were storing fertilisers for soybean planting and the market price of
MAP increased by USD2/t in Brazil) are expected to support the MAP price to go
up slightly in the domestic market.
- Diammonium phosphate (DAP)
Farmers were buying fertilisers; distributors were purchasing more DAP, but
still prudently. The average quotation was USD338/t (RMB2,260/t). Domestic DAP
manufacturers were partly relieved from heavy inventory pressure thanks to the
peak demand season in autumn in the domestic market and the rigid demand from
the Pakistani and Indian markets. Yet, DAP price failed to rebound due to
sufficient supply in the market.
CCM predicted that it is less likely for
phosphate fertiliser prices to increase in the short term considering slow
growth in market demand, overcapacity, low price of grains and insufficient
support from the foreign market.
In particular, transaction of DAP was slack and there were few new orders also.
In some regions, manufacturers even lower their quotations to USD299/t
(RMB2,000/t). Rumours that quotations will continue to decline has caused
distributors to hold wait and see attitudes towards the market and to stock
limited products. According to CCM, oversupply was the main reason behind this
phenomenon.
Market demand for phosphate fertilisers has dropped to the bottom in 2016. The
falling grain price in the winter of 2015 has casted a shadow on the domestic
fertiliser market since the beginning of 2016. The sharp decline in demand from
the overseas market also hit the domestic market severely. For example, India
consumed about 2 million tonnes of DAP between Jan. and July 2016, 30% less
than that in the corresponding period of 2015.
In the meantime, Morocco
exported over 100,000 tonnes of DAP to India during the same period
aforementioned (zero tonne in the corresponding period of 2015), causing tense
competition in the market. So it is less likely that India has demand for DAP
as high as in 2015 from China in 2016.
However, supply of DAP increased significantly against the depressed market in
2016. Many domestic DAP manufacturers decided to add production capacity under
the influence of the explosive growth in export volume in 2015 and the release
of the plan of achieving zero growth in fertiliser consumption by 2020 (new
ammonium phosphate production capacity will not be approved in the future).
According to incomplete statistics, as of Sept. 2016, the total designed
production capacity of DAP in China has already reached 2.40 million t/a.
Though production capacity of many new projects have not fully released, the
overcapacity situation in the industry is expected to be further aggravated in
the near future.
In addition, according to trade sources, the majority of domestic phosphate
fertiliser manufacturers were having limited liquid capital because many
distributors buy fertilisers on credit and the bank cut the amount of currency
in circulation. As a result, they have to sell their products at low prices in
order to collect cash and this has caused vicious price competition in the
market.
This article comes from Phosphorus Industry China Monthly Report 1609, CCM
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Tag: phosphorus phosphate