Phosphates demand picking up in some regions ahead of Lunar New Year

Focus article by Sylvia Traganida

LONDON (ICIS)–The phosphates market is subdued in the east this week as Chinese players are out of the market due to the Lunar New Year holiday, according to sources on Friday.

However, some diammonium phosphate (DAP) demand has been heard in India this week, as three tenders have been issued for 100,000-200,000 tonnes of DAP, but the shipment period is from March/April.

It seems that buyers want to get tonnes at today’s prices before the fertilizer subsidies are announced in March and prices edge upwards.

In addition, there is still no settlement on the phosphoric acid contracts for Q1 deliveries to India between OCP and its customers. This is expected to give a price direction to the market and essentially determine how much DAP needs to be imported in 2017 and whether it would be cheaper to import rather than produce DAP in India.

Elsewhere in the Indian subcontinent, Pakistani importers have announced that they would be suspending imports of DAP as the government is yet to pay over the subsidies for the last four months.

It remains to be seen how much of an impact this move will have in the global market, as Pakistan requirements have been covered by previous DAP purchases recently.

West of Suez, the Tampa DAP price has risen on a Mosaic sale to Latin America. In the domestic market, DAP and monoammonium phosphate (MAP) prices are stable, but Mosaic has increased its offer prices for February and March in anticipation of more spring demand.

A trader said: “DAP/MAP prices are firming fast on the back of ammonia price increases”.

On the supply side, most producers are looking to March to secure business. Saudi producers Ma’aden and SABIC are sold out for January and February.

With Chinese suppliers reducing production due to pollution issues and slow demand in the Indian subcontinent, the rest of the producers are looking to compete in other active regions, such as Australia, Africa and Latin America.

Average operating rates at Chinese domestic plants are around 50% for DAP and MAP.

China exported 6.8m tonnes of DAP in 2016, down 15.23% from the 8.02m tonnes the year before.

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