23 January 2012 14:56 [Source: ICIS news]
LONDON (ICIS)--A drought of phosphate fertilizer exports from the US Gulf lasting almost two months has ended, but the price has underlined the weak market, sources said on Monday.
The DAP cargo, which was produced by Mississippi Phosphates, will be shipped next month to an undisclosed destination in Central America.
The threat of imminent regulations restricting phosphate fertilizer cargoes into Argentina, coupled with an industry conference in Buenos Aires, triggered a spate of DAP buying and sparked the first sale from the US Gulf this year.
Prices are likely to be supported at this level if increasing demand from Latin America continues to convert into sales, but an uptick leading to firmer pricing is not expected before February.
Consequently, market sources remain cautious.
“The spot price is not going to run away but sales will put price discovery back into the market,” said a trader. “We are not out of the woods yet and there could be another dip.”
The phosphates market softened considerably leading up to the end of 2011, as expected demand in the US, Europe and Latin America failed to materialise.
The benchmark US Gulf price for DAP exports initially came under pressure from a tumbling domestic market, in which prices plunged by $50/short ton to end the year at $445/short ton FOB Nola.
As this was equivalent to an export price of around $510/tonne FOB Tampa, suppliers and traders considered buying and reselling DAP barges on the international market.
But the absence of demand globally undermined export prices and no further sales were recorded for almost seven weeks.
In a bid to shore up the weakening market, producers announced they would reduce phosphate output, effective across the first quarter of 2012.
Although the cuts by Mosaic in the US, Russia’s PhosAgro and Office Cherifien des Phosphates in Morocco stimulated buying flurries in the US and Europe earlier this month, until now it had failed to prompt exports from the US Gulf.
($1 = €0.78)
Follow Karen Thomas on Twitter @KarenICIS
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