India's increase in MRP, rupee depreciation keep phosphates market on its toes

14 September 2018 16:00 Source:ICIS News

LONDON (ICIS)--The phosphates market's activity this week was concentrated in India, where the rupee's depreciation is prompting domestic producer to increase prices.

- Indian buyers hesitant to make purchases on currency depreciation

- Brazil MAP imports down 23% in January-August year on year

Nola prices under pressure on Mississippi's navigation closure

Following the continuing depreciation of the rupee, most producers in India have increased their domestic maximum retail price (MRP) for diammonium phosphate (DAP).

However, it remains unclear whether the farmers will be able to afford to buy product, and how this will affect import demand.

For the time being, DAP demand in India is covered with previous purchases and there are estimations that the country needs 1m tonnes of DAP more until the end of the financial year in March 2019.

Buyers need to make purchases soon because if material arrives after mid-November, it will not be used for the rabi season – the cropping season from October to March – and will go to the inventories.

Talks for phosphoric acid contract prices for fourth-quarter deliveries are expected to start in the coming weeks; there are expectations that Morocco's OCP will push for a price increase, which would not make DAP prices workable in India.

In China, the sentiment in the DAP market is firm but resistance is coming from the Indian subcontinent.

Producers are keeping their offers stable, as soon they will start focusing on the domestic market.

West of Suez, the Tampa DAP price remains unchanged this week on a lack of business from Mosaic. In the domestic market, activity is subdued and prices are edging slightly upwards on tight availability.

In Brazil, the monoammonium phosphate (MAP) market is stable, but producers are reporting healthy demand ahead of the safra croppring season and keeping their offers high, as they turn focus to MAP deliveries through to November.

MAP Imports into Brazil in January-August fellen 23.14% year on year to 1.88m tonnes, according to data from GTIS/SECEX – Foreign Trade Secretariat.

Some producers prefer to send cargoes to Nola rather than Brazil, especially before the closure of the Mississippi river navigation from mid-October onwards.

Producers have said they comfortable for October, when demand is expected to pick up in the Americas, allowing them to keep their offers high.

Demand in Europe is also expected to pick up soon, with OCP likely to focus on that market once it concludes shipping cargoes to Brazil.

There are expectations that the Moroccan producer will offer heavily under next week’s Ethiopia nitrogen, phosphorus, sulphur (NPS) tender, which is expected to take some tonnage out of the market.

“There is not too much support for prices in general; customers expect a drop in prices in Q4,” said a trader.

Pictured: Indian farmers cropping a paddy field on 12 September
Source: Idrees Abbas/SOPA Images/REX/Shutterstock

Focus article by Sylvia Traganida

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By Sylvia Traganida