LONDON (ICIS)--International phosphate prices are holding firm and in many instances increasing on the back of healthy demand, tightness and rising feedstock costs.
Major feedstock phosphoric acid, which is heavily supplied out of Morocco, posted an increase of $28/tonne for the third-quarter contract price with its customers in India.
India, the largest importer of diammonium phosphates (DAP) in the world, still has a number of DAP tenders pending, with the collapse of the Indian rupee versus the US dollar largely to blame.
The rise in the value of phosphate rock has also supported prices.
However, Indian demand is expected to be strong during the third quarter, with interest from Pakistan and Bangladesh.
In Pakistan, DAP offers increased and Engro has bought 50,000 tonnes, according to sources.
Bangladesh, in particular, will take out some volume in the coming months, as the shipment window for its recent tender for 17,000 tonnes of monoammonium phosphates (MAP) and 330,500 tonnes of triple super phosphates (TSP) is 30 October.
Nepal too is currently in the market, with Salt Trading and Desh Trading seeking tonnes.
For major phosphate producer China, DAP is now offered at $420/tonne FOB (free on board) for export.
The gains are largely on the back of market tightness caused by production cuts, but bullishness felt across the international DAP market has also supported price intentions.
Demand is seen from India and the Indian subcontinent, but owing the upswing in prices, some traders have retreated to the sidelines.
Meanwhile, Chinese domestic MAP demand is forecast as healthy and this is supporting prices. Production at Hubei, Henan and Guizhou is either running at reduced run rates or shut down.
Feedstock costs are also higher, partly because of the depreciation of the Chinese yuan.
Phosphate rock is in short supply caused by environmental production cuts, another contributing factor for the strength of DAP pricing.
Across to the Americas, the 4 July holiday resulted in a slow week in terms of volume traded although DAP barge activity has taken place above $400/short ton FOB.
For major fertilizer importer Brazil, Office Cherifien des Phosphates (OCP) is considering offering MAP at $460/tonne CFR (cost and freight), but this is deemed too high for some market followers.
Meanwhile, PhosAgro is sold-out and is expected to offer August tonnes at $450/tonne CFR.
International traders are currently valuing Brazilian MAP at $445-450/tonne CFR. Good demand and tight supply are the reasons behind the higher prices.
Focus article by Julia Meehan