Brief analysis of China's phosphate fertiliser market in Q1 2023 05-05-2023

Summary: The overall phosphate fertiliser price showed a downward in Q1 2023 as raw material prices fluctuated frequently and downstream demand was sluggish.

In Q1 2023, phosphate fertiliser prices edged down mainly because of changes of demand and raw material prices. Demand for phosphate fertilisers was tepid in the traditional peak season of fertilisers for spring ploughing. Moreover, prices of raw materials like phosphorus ore, synthetic ammonia (NH3), and sulphur fluctuated frequently and customers mainly took wait-and-see attitudes; a few transactions were seen.


Monoammonium phosphate (MAP)

In Jan., some MAP factories cut down prices to attracted orders and reduce overstock pressure as market demand was sluggish. During the Spring Festival (late Jan. 2023), compound fertiliser enterprises stocked up on raw materials in advance of the holiday when MAP factories received abundant orders to be delivered, thus reducing overstock pressure and prices became stabilised.


In Feb., MAP market maintained stability for some time and then continued to weaken. Downstream compound fertiliser enterprises kept purchasing an adequate amount of raw materials based on rigid demand since the spring planting market went on slowly. A few new deals were made and market supply exceeded demand, with prices slipping.


In March, MAP market prices still maintained a downward trend and therefore some factories started to cut down production while some small factories conducted maintenance, significantly decreasing industry operating rates. Fertilising period in spring drew to an end and fertilising in summer went on slowly; downstream compound fertiliser enterprises were less enthusiastic about buying and MAP factories received a limited number of new orders.


Diammonium phosphate (DAP)

In Jan., DAP market prices declined within a smaller range compared with MAP prices. Before the Chinese New Year, DAP supply was tight and traders were unwilling to sell their products. Factories received a small number of orders before the holiday, but downstream customers were reluctant to accept high-price products; thus only a few transactions were seen in the market. DAP market recovered slowly after the holiday and the overall market remained stable.


In Feb., DAP prices edged up mainly because supply of high-content product was tight and factories mainly delivered orders received in earlier stage, facing little overstock pressure. Meanwhile, raw material prices stopped falling but started to rebound, so quotations of factories increased slightly in late Feb.


In early March, prices of raw materials of DAP showed a consolidation trend at a high level and enterprises have arranged orders to be delivered until early April. Supply of high-content DAP was still in shortage and downstream traders were cautious about purchasing. In late March, DAP market weakened and downstream demand became slack, with few new orders made. Some factories suspended production for overhaul, dropping industry operating rates.


In terms of raw materials, prices of sulphur maintained a downward trend and NH3 prices also descended, weakening cost support for phosphate fertilisers and dampening market confidence; phosphorus ore prices remained firm at a high level and manufacturers faced larger cost pressure.


Since April, downstream compound fertilisers were not enthusiastic about purchasing and phosphate fertiliser sales entered traditional slack season. Phosphate fertiliser prices are predicted to remain weak in the short term. As demand decreases in the near future, supply of enterprises may also decline; attention should be paid to changes of raw materials, supply and demand.


More information can be found at CCM Phosphorus China Monthly Report.

About CCM:

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