Phosphate Fertilizer Market Analysis: May Stand Alone in the Fertilizer Market

Recently, crude oil prices have fallen, affecting many related markets, but the phosphate fertilizer market has maintained a good trend over the past year, and now the months of May and June, when demand was at its lowest, have passed. After this, domestic demand will gradually start up, and even if prices fall, the pace will not be too fast. It is expected that in September, phosphate fertilizer will stand alone in the market.

In the first half of this year, China's exports of monoammonium phosphate and diammonium phosphate grew significantly. According to customs data, in May China's monoammonium phosphate export volume was 569,800 tons, a year-on-year increase of 610%; in April the monoammonium phosphate export volume was 123,600 tons, a year-on-year increase of 72.34%; in March the monoammonium phosphate export volume was 201,000 tons, a year-on-year increase of 38.04%; in February the monoammonium phosphate export volume was 219,100 tons, a year-on-year increase of 141.59%; in January the monoammonium phosphate export volume was 60,900 tons, a year-on-year increase of 140%. From January to May this year, China's monoammonium phosphate export volume was 1,174,500 tons, compared with 425,100 tons in the same period last year, a year-on-year increase of 176%.

Last year, phosphate fertilizer production fell by nearly 15% compared with 2013, but last year 4.87 million tons of diammonium phosphate were exported, an increase of nearly 30% over 2013; 2.33 million tons of monoammonium phosphate were exported, an increase of nearly 250% over 2013, and the exports of diammonium phosphate and monoammonium phosphate were mainly concentrated in the second half of the year. Between the one increase and one decrease, phosphate fertilizer became the product with the most thorough destocking among fertilizer varieties, and the inventory carried over into this year was greatly reduced.

Against the backdrop of a sluggish global economy and continuously falling commodity prices, phosphate fertilizer, especially diammonium phosphate, has maintained a firm trend over the past year, but making an optimistic judgment about the later trend requires great courage. The author believes that under the situation of severe global overcapacity in phosphate fertilizer, the global restocking cycle will end sooner or later, and it may come very soon. But there is no need to make an overly pessimistic judgment about the domestic market in autumn: historical experience tells us that cliff-like price declines generally occur in the process of severely insufficient demand and destocking.

There is no doubt that the current domestic phosphate fertilizer inventory is not high, and the months of May and June, when demand was at its lowest, have passed. After this, domestic demand will gradually start up, and even if prices fall, the pace will not be too fast. In other words, phosphate fertilizer can still remain unaffected before September this year.