LONDON (ICIS)–The phosphates market is braced for a slow start to 2019, as demand will start to kick in in the main regions.
In India, diammonium phosphate (DAP) buyers are expected to return to the market in early January, when phosphoric acid contract prices are settled for Q1 deliveries between Moroccan producer OCP and its Indian customers.
Market players expect a decrease in phosphoric acid prices in India, as raw material prices (ammonia and sulphur) are easing or stabilising.
This price is expected to offer some price direction to the market and determine whether it will be cheaper to import DAP or produce it domestically using phosphoric acid.
There are is estimates that Indian buyers have already bought more than 6m tonnes of DAP which is around 1.5m tonnes higher than the previous year, so DAP purchases in Q1 are expected to be limited.
In China, DAP/monoammonium phosphate (MAP) producers have stepped out of the export market and started to focus on the domestic season.
This is expected to last well into the first quarter and after the Lunar New Year in early February. In the rest of Asia, Australia will continue to have strong import demand and remain one of the most active markets for all products, with tonnes arriving from China, the US, Saudi Arabia and even Mexico.
In the US, DAP and MAP exports out of Tampa are expected to pick up in 2019, as demand is due to increase globally in the main regions, such as India, Pakistan, Australia and Latin America.
In the domestic market, there is talk that demand for DAP/MAP barges will increase at the beginning of the year for spring application.
The Brazilian market is expected to pick up in the new year, as buyers will be looking to replenish stocks for the safrinha season. Moroccan, Russian and Chinese MAP producers are expected to compete for business in the region and there are expectations that prices will rebound following their recent slide.
On the supply side, OCP and Saudi producers have started slowly to ramp up phosphates production in 2018 despite production issues and maintenance.
The supply scenario in 2019 is expected to be balanced to oversupplied, especially following the developments in two major plants in the US: the idling of Mosaic’s Plant City in Q4 2017 and Nutrien converting its Redwater phosphate plant in Alberta to an ammonium sulphate (AS) operation in the third quarter of 2019.