Phosphate Fertilizer Monthly Report: Market Prices Steadily Declining, Weak Downstream Demand

Analysis and Forecast of Phosphate Fertilizer Market Prices:

Monocalcium Phosphate (MCP) Market Price Analysis:
This month, the MCP market in China has been adjusting steadily with a slight downward trend in prices.

According to Feiduodu (FDD) data: As of December 28, 2023, the average price index for 55% powder MCP in China was 3379.38, down by 98.13 compared to the beginning of the month, a 2.82% month-on-month decrease; the price index for 55% granular MCP was 3400.00, remaining stable; and the price index for 58% powder MCP was 3633.33, down by 50.00, a 1.36% month-on-month decrease.

At the beginning of the month, many MCP enterprises temporarily suspended quoting. With the reduction in backorders, new orders did not show improvement. High-cost pressures and some enterprises facing raw material supply issues slightly decreased industry operating rates. Factory prices were relatively firm, but downstream traders sold goods at lower prices, forming a price inversion with factory high prices. The market inquiry atmosphere improved slightly, but most traders remained cautious, maintaining small-scale low-price purchases.

Mid-month, MCP market prices remained generally stable with slight drops. Factory backorders provided weak support for MCP prices, leading to price flexibility depending on individual factory situations. Large factories mostly suspended quoting without releasing new prices, while some small factories slightly lowered prices to accept limited orders. Market transactions remained weak, affected by snow and weather conditions hindering goods transportation, causing a continuation of cautious market sentiment and limited new deal completions.

By the end of the month, the trend of stable to slightly declining MCP prices continued. Factories faced increasing pressure to accept new orders, resulting in forced price reductions. However, market transactions remained flat, with most deals remaining negotiable. The current market's demand for high-nitrogen fertilizers limited the demand for phosphate fertilizers, making it difficult for market high prices to be supported. However, cost support remained present, leading to a persistent stalemate in the market atmosphere.

Diammonium Phosphate (DAP) Market Price Analysis:
This month, the DAP market in China saw a slight loosening and downward adjustment in prices, with overall minor price changes.

According to FDD data: As of December 28, 2023, the price index for 64% granular DAP in China was 3871.67, down by 8.33 compared to last month, a 0.21% month-on-month decrease; the price index for 60% brown DAP was 3460.00, down by 210.00, a 5.72% month-on-month decrease; and the price index for 57% DAP was 3567.50, down by 42.50, a 1.18% month-on-month decrease.

At the beginning of the month, enterprises maintained firm prices due to sufficient backorders and cost support. With no inventory or sales pressure, factory prices remained firm, and the production focus shifted towards the domestic market, gradually increasing supply and daily production. Downstream purchasing remained cautious, and market transactions were generally flat.

Mid-month, DAP prices saw a slight downward adjustment. The mainstream winter storage market remained tepid, with lackluster purchasing enthusiasm and continued weak transaction prices. High factory prices faced pressure, and upstream stockist prices slightly declined, leading to few factory orders and some factories lowering their quotes to accept orders.

By the end of the month, the trend of steady to slightly declining prices continued. Factories primarily executed domestic pre-orders with stable factory prices and a firm mindset. Some factory units stopped or underwent maintenance, reducing supply and bolstering overall price support, leading to a persistent stalemate in the market atmosphere.

Phosphate Fertilizer Market Forecast:

In terms of raw materials, the phosphate rock prices showed a weak downtrend, leading to factory price reductions. However, this did not change the situation of limited new orders and a generally flat market atmosphere. Factory operations adjusted based on sales, and operating rates remained low. Next month, phosphate rock prices are expected to continue a weak downward adjustment. Ammonia prices fluctuated, with varying regional demands and prices showing regional characteristics. With ample supply, the market remained weak, and next month's market is expected to continue with minor adjustments. Sulfur prices remained firm this month, with limited supply and slightly increased operating rates. The market is expected to continue with minor adjustments next month. Cost operations are expected to remain stagnant, with continued firm cost support.

In terms of supply and demand, the MCP operating rate remained high, while the DAP industry's operating rate slightly increased at a low level, with limited market arrivals. Demand-wise, this month's agricultural phosphate fertilizer needs were limited, leading to a flat market atmosphere and cautious downstream purchasing. The demand for compound fertilizers was weak, lacking rigid purchasing needs and leading to reduced operating rates.

Overall, with upstream raw material prices remaining firm and policy support for supply and price stability, traders' cautious attitude is expected to continue. Next month, the phosphate fertilizer market is expected to continue with a stable to gradually slight downward adjustment.

Domestic Phosphate Fertilizer Industry Operating Rates:

Domestic MCP Industry Operating Rate:
As of December 28, 2023, the domestic MCP industry operating rate was approximately 59.19%, a 1.27% month-on-month increase but a 0.04% year-on-year decrease, remaining lower than last year.

Domestic DAP Industry Operating Rate:
As of December 28, 2023, the domestic DAP industry operating rate was approximately 53.44%, a 4.18% month-on-month increase and a 3.53% year-on-year increase, remaining higher than last year.

Domestic Phosphate Fertilizer Production Trends:

Domestic MCP Production Trend:
According to FDD data, as of December 28, the monthly production of MCP in China was 98.00 million tons, a 0.64 million ton decrease from the previous month, a 0.65% month-on-month decrease, and a 4.07% year-on-year increase.

Domestic DAP Production Trend:
According to FDD data, as of December 28, the monthly production of DAP in China was approximately 101.00 million tons, a 5.70 million ton decrease from the previous month, a 5.34% month-on-month decrease, and a 1.00% year-on-year increase.

Domestic Phosphate Fertilizer Import and Export Data:

Domestic MCP Export Data:
According to customs data, in November 2023, China's MCP export volume was 218,500 tons, an increase of 21,600 tons compared to the same period last year, a 10.97% year-on-year increase; compared to the previous month, it increased by 59,500 tons, a 37.46% month-on-month increase; the average export price for the month was USD 482.43 per ton. From January to November 2023, the cumulative export volume was 1,914,100 tons, an increase of 39,100 tons compared to the previous year, a 2.08% year-on-year increase.

Domestic MCP Import Data:
According to customs data, in November 2023, China's MCP import volume was 799.88 tons, an increase of 773.98 tons compared to the same period last year, a 2988.34% year-on-year increase; compared to the previous month, it increased by 799.68 tons, a 399840.00% month-on-month increase; the average import price for the month was USD 0.68 per ton. From January to November 2023, the cumulative import volume was 1,201.07 tons, an increase of 813.16 tons compared to the previous year, a 209.63% year-on-year increase.

Domestic DAP Export Data:
According to customs data, in November 2023, China's DAP export volume was 615,700 tons, an increase of 414,600 tons compared to the same period last year, a 206.18% year-on-year increase; compared to the previous month, it increased by 174,900 tons, a 39.68% month-on-month increase; the average export price for the month was USD 567.60 per ton. From January to November 2023, the cumulative export volume was 4,668,800 tons, an increase of 1,342,000 tons compared to the previous year, a 40.34% year-on-year increase.

Domestic DAP Import Data:
According to customs data, in November 2023, China's DAP import volume was 100.56 tons, an increase of 100.48 tons compared to the same period last year, a 125593.75% year-on-year increase; compared to the previous month, it increased by 100.00 tons, a 18050.72% month-on-month increase; the average import price for the month was USD 915.20 per ton. From January to November 2023, the cumulative import volume was 125.94 tons, a decrease of 202.01 tons compared to the previous year, a 61.60% year-on-year decrease.

Domestic Phosphate Fertilizer Apparent Consumption Data:

Domestic MCP Apparent Consumption Data:
In November 2023, China's apparent consumption of MCP was 768,700 tons, a decrease of 60,000 tons compared to October, a 7.24% month-on-month decrease, and an increase of 226,200 tons compared to the same period last year, a 41.70% year-on-year increase. From January to November 2023, the cumulative apparent consumption of MCP in China was 7,765,200 tons, an increase of 460,900 tons compared to the same period last year, a 6.31% year-on-year increase.

Domestic DAP Apparent Consumption Data:
In November 2023, China's apparent consumption of DAP was 451,400 tons, a decrease of 243,800 tons compared to October, a 35.07% month-on-month decrease, and a decrease of 215,000 tons compared to the same period last year, a 32.26% year-on-year decrease. From January to November 2023, the cumulative apparent consumption of DAP in China was 8,135,900 tons, an increase of 84,700 tons compared to the same period last year, a 1.05% year-on-year increase.

Domestic Phosphate Fertilizer Port Inventory Trend:

Domestic MCP Port Inventory Trend:
As of December 23, the domestic MCP port inventory was 79,000 tons, an increase of 33,900 tons compared to the end of the previous month, a 75.17% increase, and a decrease of 53,500 tons compared to the same period last year, a 40.51% decrease. The domestic MCP port inventory increased during the month.

Domestic DAP Port Inventory Trend:
As of December 23, the domestic DAP port inventory was 173,200 tons, a decrease of 94,000 tons compared to the end of the previous month, a 35.18% decrease, and a decrease of 7,200 tons compared to the same period last year, a 3.99% decrease. The domestic DAP port inventory decreased during the month.