Phosphates demand increases as OCP settles Q2 phos acid India contracts

Sylvia Traganida

10-Mar-2017

Focus article by Sylvia Traganida

LONDON (ICIS)-All eyes in the phosphates market were on India this week, as Moroccan producer Office Cherifien des Phosphates (OCP) agreed contract prices for Q2 phosphoric acid deliveries at a $40/tonne premium from the previous quarter, according to sources on Friday.

This increase would reflect a diammonium phosphate (DAP) parity of around $380/tonne CFR (cost and freight), which is higher than the offers received under India’s recent purchase tenders.

However, other buyers in India that are not joint venture partners with OCP are asking for lower prices. The phosphoric acid settlement is expected to offer some price direction to the market. Market players estimate that this could be a boost to Chinese producers who can offer DAP at lower levels.

Other buyers that do not buy from OCP said that “the Q2 price is not acceptable, it is not workable for us”.

DAP demand in India is subdued, with the only buyer being NFL which is closing a purchase tender end March for end April/May delivery. More buyers are expected to return to the Indian market in Q2, when the fertilizer subsidies and the maximum retail price (MRP) will be announced.

West of Suez, the Tampa DAP price rally has calmed down following a Mosaic sale to Latin America at levels unchanged from last week. The barge market is under pressure on limited activity despite tight availability. There are expectations that Moroccan cargoes will all arrive at the same time at Nola because of the delays in loading at Jorf Lasfar, thus bringing barge prices down.

Mosaic said “it has very limited availability at Nola until 2H April and will focus on sales in upcountry warehouses”.

The Brazilian monoammonium phosphate (MAP) market remains stable, with no new business heard. There are expectations that demand will pick up in the coming weeks.

Brazil MAP imports almost doubled in February to 241,228 tonnes from the 126,639 tonnes it imported during the same period in 2016.

On the supply side, most producers are comfortable for April and have started offering product at higher levels.

Most producers are optimistic about demand from the southern hemisphere (Indian subcontinent, Latin America) and are also expected to benefit from shipment delays in Morocco. Also, short supply from China is expected to push up global phosphate prices.

A producer said that “the global phosphate demand is increasing and prices are firming up”.

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