Linked In
News In
Linked In

You are viewing 1 of your 2 complimentary articles.

Register now to receive full access.

Already registered?

Login | Join us now

Phosphate prices may find support from Chinese output cuts

Twitter Linkedin

PhosAgro flagged the potential for support to phosphate prices from Chinese production cuts, echoing comments raised by rival Mosaic, as the Russian group unveiled an acceleration in sales, supported by its domestic market.

The Moscow-based group acknowledged the weight on phosphate prices in the first half of 2017 from factors including the "ramp-up" of new capacity in Morocco, where sector giant OCP is expanding operations, and in extra exports from Saudi Arabia too.

However, it also stressed a rise of almost 25% in exports during the first half of the year from China – where output could be facing cutbacks.

"Further potential production cuts in China," besides a seasonal rise in northern hemisphere and, in particular, Indian demand "may provide extra protection to market prices against additional supply" stemming from OCP and Saudi Arabia's Ma'aden.

Chinese outlook

The comments follow a forecast last week from US-based Mosaic, the world's biggest producer of finished phosphate fertilizers, that Chinese exports will, despite their strong start to 2017, end the year down on the 2016 total, by some 500,000 tonnes at 9m tonnes.

Michael Rahm, vice-president of market and strategic analysis at Mosaic, flagged a boost to China's own demand, saying that "we expect the domestic [Chinese] market to really kick in here over the next few weeks".

Meanwhile, upward pressure on raw material costs, for the likes of the ammonia products with which phosphates are bonded for sale as DAP (diammonium phosphate) or MAP (monoammonium phosphate) is reducing Chinese phosphate groups' willingness to settle for export prices.

According to Mosaic, interior Chinese phosphate prices are about $10-15 a tonne higher than the export equivalent.

"Chinese producers do not necessarily have a competitive advantage in terms of sulphur prices or ammonia prices since they make most of their ammonia with coal," Mr Rahm said.

"And coal prices have actually increased over the last six months."

'Priority market'

PhosAgro's comments came as it unveiled a 15.0% rise to 2.07m tonnes in sales of fertilizers in the April-to-June quarter, with phosphates accounting for 1.64m tonnes of these, a rise of 13.2%.

The group's chief executive, Andrey Guryev, flagged in particular growth in sales of MAP, which soared by more than 25% year on year, "driven by demand from the Russian and Brazilian markets".

"Russia remains a priority market for the company," said Mr Guryev, adding that PhosAgro's domestic sales for the January-to-June period had risen by more than 20%, "despite overall consumption for the Russian market remaining nearly flat".

PhosAgro's fertilizer output rose by 15.7% to 1.04m tonnes during the latest quarter, led by 20% rise to 1.65m tonnes in phosphates.

PhosAgro shares stood 1.5% higher at 2415 roubles in late deals in Moscow.

By Mike Verdin

Twitter Linkedin
Related Stories

Festive staff shortages 'likely' as British growers cut ties with UK supermarkets

Faced with mounting concerns over labour shortages and fears they may not be able to fulfil retailer contracts, some British growers have sought to cut ties with UK supermarkets in favour of companies elsewhere in Europe.

Hard Brexit to have 'catastrophic' effect on European meat industry; new report

A hard Brexit will have a ‘catastrophic impact’ on the European meat industry, according to a report published by Europe’s meat industry body, UECBV, as the UK and EU continue negotiations.

Manufacturers stockpile agrochemicals in bid to keep post-Brexit prices down for farmers

Manufacturers of crop protection products are stockpiling agrochemicals in warehouses in a bid to keep input costs down for farmers after Brexit, according to the chief executive of the Crop Protection Association, Sarah Mukherjee.

Dairy groups sidestep shockwaves from GDT price slump

Indeed, shares in the likes of A2 and Beston soar. Still, that does not mean there are no losers from the dairy price falls...
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of the Briefing Media group
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069