When entering August, China’s Phosphate Price Index still remained at a low level, which seems to last for long, even in the planting season, according to CCM International’s August issue of Phosphorus Industry China Monthly Report.
According to China Agricultural Means of Production Association (CAMPA), China’s DAP plants were operating around 80%-85% of capacity in July. In view of current low exports and slack domestic consumption, it could be foreseen that Chinese DAP producers’ inventory might remain at a high level for poor shipments. Consequently, domestic supply of DAP won’t be tight even in the planting season.
In terms of the supply of raw materials, the price of phosphorus ore saw a little slide in July. Phosphate fertilizer producers mentioned that the enquiry from upstream phosphorus mining enterprises was increasing, leading several phosphorus mining enterprises to cut price. However, it’s difficult to judge whether the price of phosphorus ore is to rebound, out of the consideration of the supply of phosphorus ore in fertilization season. Also, DAP producers indicated that the current price of DAP was quite close to cost, especially for those producers without phosphorus resources.
In addition, there’s a question for DAP producers: whether the price of phosphorus ore would rise in the season of peak demand.
Relatively speaking, China’s farmers are weak in purchasing power. Therefore, they are apt to decrease the consumption in DAP if the price rises to an unacceptable level. Previous market situation of DAP in China witnessed such situation. From 2010 to H1 2011, the market price of DAP was driven by rising phosphorus ore, which gradually outpaced China’s farmer’s purchasing power. Thus it saw a trend of decline in H2 2011. (Note: Previous market price of DAP in China could see page 5 issue 6 Vol.2: China publishes first wholesale price index for DAP).
Apparently, low tolerance for high price of consumers was bound to be the prime reason why DAP producers or distributors couldn’t easily pass on the cost.
Source:Phosphorus Industry China Monthly Report 1208
http://www.cnchemicals.com/Newsletter/PhosphorusIndustryChinaMonthlyReport.shtml
Headlines of Phosphorus Industry China Monthly Report 1208
Phosphorus Ore
Company Dynamics: Phosphorus mining business to bring huge profits for Sichuan Hebang
Company Dynamics: Growing uncertainty to surround China Baoan’s new investment plan
Company Dynamics: Guizhou Government makes up development scheme for Kailin Group
Yellow Phosphorus
Policy & Legislation: Irreplaceability of yellow phosphorus to last for long in China
Phosphate Fertilizer
Policy & Legislation: China to further heighten utilization of phosphogypsum
Company Dynamics: Liuguo Chemical fails to make more profit in H1 2012
Policy & Legislation: Hubei Government to curb local capacity expansion of fertilizer
Industry Dynamics: China’s DAP sees limited upside for price
Fine Phosphate Chemical
Industry Dynamics: Phosphorus investment rising in Leibo County
Company Dynamics: Hubei Xingfa to invest new phosphate chemicals project
Import & Export
International trade situation of phosphate chemicals in H1 2012
Price Update
Price monitor of some phosphate chemicals in July 2012
… …
Phosphorus Industry China Monthly Report, a monthly publication issued by CCM International on 15th of every month, provides you the latest information on company dynamic, industry dynamic, factors impacting the price fluctuation, technology improvement, supply & demand of China's phosphorus industry.
(Guangzhou China, Aug.15, 2012)
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