Cold snap could undermine European phosphate demand

03 February 2012 16:58  [Source: ICIS news]

LONDON (ICIS)--The blast of severe cold weather that has swept across Europe could stall a slowly emerging demand for diammonium phosphate (DAP) and undermine prices, market sources said on Friday.

Traders and buyers have voiced concerns that the DAP market, which has been slow to take off in Europe because of economic uncertainty, could come under pressure with plummeting temperatures closing ports and disrupting road and rail links.

“The cold spell has hit Germany, Italy and the UK with temperatures down to minus 11°C [23.8°F],” said one trader.

“The severe weather is forecast until the end of next week but the first application of nitrogen fertilizers is due mid-February. This could be delayed for three weeks, which could stall the demand for DAP,” the trader said.

The mild weather at the beginning of the year had prompted a surge in buying of nitrogen and DAP fertilizers, with the first application looking set for mid-February.

The main application for DAP was likely to follow during the second half of March, triggering the need for buyers to book cargoes at the end of February.

Weakening export prices gained traction and provided some relief to North African and Russian suppliers, who have cut production during the first quarter in moves to shore up prices against a lack of demand.

Italy was the first western European nation to step strongly back into the market, buying around 90,000 tonnes of Russian, Turkish and Tunisian DAP in the last three weeks in preparation for the spring crop.

Tunisian producer Groupe Chimique Tunisien (GCT) sold two 30,000 tonne cargoes of DAP in the $600–605/tonne (€456–460/tonne) FOB (free on board) range, which are due to be shipped in the next two weeks.

However, heavy snowfall in northern and central Italy has caused widespread disruption and experts describe the conditions as the coldest experienced by the country for almost three decades.

Market sources say snow has closed northern Italian ports and fear there will be delays to importing the booked cargoes.

This could postpone the first application, which could delay further demand for DAP and place downward pressure on vulnerable export prices.

($1 = €0.76)

For more information on phosphates and other fertilizers, please visit ICIS pricing fertilizers

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By: Karen Thomas
+44 208 652 3214

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