CCM: Market demand for phosphate fertilisers grow slightly in China in Sept. 2016 09-28-2016

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


About CCM:

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.


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Tag:  phosphorus  phosphate


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