Diammonium Phosphate Market Summary for Q1 2024

Overview of the Chinese Diammonium Phosphate Market:

In the first quarter of 2024, the domestic market price of diammonium phosphate (DAP) remained stable, maintaining minor range adjustments, with the market situation being stagnant and minimal changes.

According to Feidoodoo Data estimates: In Q1 2024, the domestic diammonium phosphate 64% index varied by 28.33 from its highest to lowest value, a difference of 0.74%; the 60% index varied by 10.00, a difference of 0.29%; and the 57% granular index varied by 60.00, a difference of 1.71%.

In January, the domestic DAP market prices were weakly stable. Companies mainly executed pre-received orders, and with the support of pending orders, the mentality was firm. Factory prices remained stable, and some factories implemented a batch release and order-receiving mode. Actual transactions were mostly negotiated, with pending orders performing reasonably well. Downstream demand for DAP was minimal, leading to low purchasing enthusiasm. Downstream traders had weak intent to replenish stocks, maintaining small quantity purchases as needed, with actual transaction prices being low. The market was sluggish, and the transaction atmosphere was stagnant.

In February, domestic DAP market prices were stable with slight increases. Influenced by the Spring Festival holiday, market conditions were depressed before the holiday and slightly adjusted afterward. Before the holiday, affected by the low market conditions, companies gradually stopped production and reduced output, leading to a reduction in industry supply. Downstream compound fertilizer factories adopted a wait-and-see approach, reducing production and lowering their willingness to purchase raw materials. As the holiday approached and logistics gradually ceased operations, companies’ quotes remained stable without clear pricing, leading the market into a state of no price, no market. After the holiday, the market adjusted slightly upwards influenced by export sentiment, but with a limited increase due to a wait-and-see attitude towards demand.

In March, the overall domestic DAP market prices were stable. Influenced by export news, the market sentiment was positive. Some companies exported goods to ports, and traders' enthusiasm for stocking fertilizers increased, stabilizing market prices. As export operations gradually commenced towards the end of the month, DAP companies saw an increase in goods collected at ports. However, international prices trended downwards, with export benefits providing weak support, making it difficult to influence domestic price changes. Moreover, domestic downstream purchases continued in small quantities at a slow pace, leading to a weak operation with minor downward adjustments in the DAP market. The market remained stable throughout the month with little change.

Production and Operating Rates of the Chinese Phosphate Fertilizer Market:
Diammonium Phosphate Production Analysis:

According to Feidoodoo Data statistics: From January to March 2024, China's cumulative production of diammonium phosphate was 3.8074 million tons, an increase of 467,400 tons compared to the same period last year, up by 13.99%.

Diammonium Phosphate Industry Operating Rate Statistics:

According to Fertile Data statistics: From January to March 2024, the average operating rate of the Chinese diammonium phosphate industry was 57.57%, an increase of 0.08% compared to the same period last year.

In January, DAP companies continued to prioritize supply, with some companies reducing production due to environmental regulations, but others resuming production after previous maintenance, slightly increasing the industry operating rate. In February, DAP companies had sufficient pre-received orders, mainly focusing on supply, with most plants operating normally and a few short stops, leading to a slight decrease in supply. In March, with sufficient pre-received orders and an increase in export orders towards the end of the month, the industry's operating rate remained high throughout the month, leading to increased production.

Analysis of China's Phosphate Fertilizer Import and Export Data:
Diammonium Phosphate Export Data:

According to customs data: From January to February 2024, the total export volume was 115,400 tons, a decrease of 254,700 tons compared to the previous year, down by 68.83%.

Diammonium Phosphate Apparent Consumption Analysis:

According to Feidoodoo Data statistics: From January to February 2024, China's apparent consumption of diammonium phosphate was 2.2246 million tons, an increase of 494,700 tons compared to the same period last year, up by 28.60%.

Trends in Chinese Diammonium Phosphate Port Inventory:

According to Feidoodoo data statistics: As of March 29, 2024, the domestic diammonium phosphate port inventory was 118,100 tons, a decrease of 10,900 tons compared to the same period last year, down by 8.45%. In the first quarter, the port inventory of diammonium phosphate gradually decreased before the Spring Festival holiday as companies' willingness to gather at ports declined. After the holiday, it gradually increased, with an increase in companies' goods gathered at ports towards the end of the quarter.

Analysis of the Downstream Agricultural Sector (Compound Fertilizers) in Q1 2024:

In January, the domestic compound fertilizer market was weak and declining, with prices being adjusted downwards. Most companies were taking orders, with actual transaction prices being flexibly adjusted. The market's transaction focus shifted downwards, with a noticeable decline. Moreover, due to the low domestic grain prices, end-sales of grain were not enthusiastic, leading to a slowdown in the procurement of spring plowing fertilizers. The demand side was weak, with limited new orders and average shipment conditions, favoring the lower end.

In February, the domestic compound fertilizer market prices remained stable, with factories mostly adjusting prices secretly. Companies shipped pre-received orders from the previous period, with stable prices, and some transactions accepted secret reductions. After the holiday, the industry's operating rate gradually increased, with a relaxed market supply and slow downstream demand follow-up. Towards the end of the month, downstream demand gradually started, improving the market atmosphere, increasing shipments, reducing company inventories, and slightly weakening the market.

In March, the domestic compound fertilizer market saw a slowdown in shipments, with transaction focuses declining and prices continuing to drop. Throughout the month, companies' shipments gradually slowed down. To promote spring fertilizer shipments, many introduced new discount policies, maintaining negotiations for transactions, with prices continuing to shift downwards. The market operated low, with upstream raw material prices decreasing, leading to lower transaction prices for compound fertilizers. The industry's profits narrowed, with a strong wait-and-see sentiment, and the market operating steadily but weakly.

Market Forecast for Diammonium Phosphate in Q2 2024:

Cost aspect: It will be difficult for synthetic ammonia prices to remain high, and phosphate rock prices are expected to be stable, with weakening support anticipated.
Supply aspect: With DAP factories continuing to operate at high rates focusing on supply and an increase in export orders towards the end of the quarter, industry supply is expected to continue at a high level next month.

Demand aspect: End-user demand remains weak with no signs of improvement. Downstream factories have limited purchases, with minimal and slow follow-up on necessary demands, maintaining a wait-and-see attitude.

In summary, with the continuous high-level operation of market supply and weak demand follow-up, the supply-demand relationship remains loose. Combined with weakening cost price support, it is expected that the diammonium phosphate market prices will fluctuate mainly stable to downward in the next quarter.