Asia, MidEast phosphate markets heat up, North America stays slow

Focus article by Sylvia Traganida

LONDON (ICIS)–The sentiment in the phosphates market in Asia has turned bullish, as China is preparing for the closing of the low export tax window in five weeks,  according to sources on Friday.

Several Chinese producers have stopped accepting new export orders, as they need to fulfil their existing business and ensure the supply for their customers in the domestic market. Most producers are sold out for September and they are not expecting any more demand from the US and Latin America for the rest of the year.

Diammonium phosphate (DAP) and monoammonium phosphate (MAP) export availability in September is understood to be tight, with some demand heard from southeast Asia.

As China is starting to focus on its domestic market, other producers, like Saudi Arabia, are expected to compete for business in India. Saudi producer SABIC is sold out until mid-October and is offering DAP at $505/tonne CFR (cost and freight) to India and Pakistan for October loading. 

West of Suez, the US Tampa benchmark price remains under pressure due to a lack of business. It remains to be seen whether there will be an agreement for a DAP contract to India like last year, which might help support the market.

In the domestic market, DAP barge prices are unchanged from last week. Demand is expected to be lacklustre for the next month until the second round of buying starts in October.

A US-based trader said that he is not seeing any demand right now. “I just don’t believe in the DAP market right now,” he added.

Barge freight rates are understood to still be high due to the tight availability of barges, as a record harvest is expected. Also, demurrage costs are heard increasing due to high freight rates.

On the supply side, North African producers are heard sold out for September. Also, there are expectations that Russia’s PhosAgro will participate in the Ethiopia DAP tender and if awarded, it will reduce the pressure to chase business in South America.