China's phosphate rock market is affected by the ban on phosphate fertilizer exports, affecting both prices and supply
The China phosphate rock market was hit hard by the international export ban on phosphate derivatives: Ultimately prices and supplies were to be affected. As the main consumptive field for phosphate rock, the constraints were noted by phosphate fertilizer export demand which was then lower than phosphate rock demand; that may lead to price fluctuations in the long term. Also, the diminishing hazard from demand may lead to more supply of phosphate rock and, thus, have further effects on depress prices.
Stricter environmental policies and adjustments in production capacity structure have significantly impacted the phosphate rock and phosphate fertilizer markets. With the rigorous implementation of environmental policies, the mining and export of phosphate rock are restricted, further affecting supply and market balance. According to the latest news, most of the quota inspections for downstream phosphate fertilizers have been completed, so the halt in phosphate fertilizer exports will have limited impact on operations in the short term, but the sentiment around production in the phosphate fertilizer upstream and downstream sectors is notably affected.
Phosphate ammonium companies are purchasing based on market demand, and mainstream phosphate ammonium companies maintain inventory levels of 2-3 months, with no immediate need for large restocking. Currently, the overall operating rate of phosphate fertilizer companies remains at around 60%, and order volumes extend into December. In the short term, there are few maintenance plans for phosphate ammonium companies; the operating rate of yellow phosphorus has slightly decreased, with the average weekly operating rate in Yunnan dropping to about 59.1%, and some facilities in Qujing reducing load; in Guizhou, the average weekly production rate has dropped to about 50.5%, with Wengfu shutting down two furnaces; the average operating rate of companies in Sichuan remains at about 57.1%. The overall operating rate for phosphoric acid is 47.05%, with thermal phosphoric acid companies operating at about 30.53% and wet purification acid companies at about 59.67%, reflecting a month-on-month increase of 0.74%.
Due to the increase in phosphoric acid operating rates, high magnesium and high phosphorus phosphate rock is becoming scarce, causing an increase in the price of phosphate concentrates.
From December to March of the following year, many domestic phosphate rock companies will enter the traditional shutdown season. China’s phosphate rock is mainly distributed in Yunnan, Sichuan, Guizhou, and Hubei, and the shutdown and mining times vary by region due to weather and other factors. Recently, downstream purchasing of phosphate rock has not been active, as fertilizer manufacturers have relatively sufficient short-term inventory, so the overall price of phosphate rock remains stable. In the future, domestic phosphate rock supply may present a tight balance, with prices likely remaining relatively firm.
The overall trading atmosphere in the domestic phosphate rock market is calm, and operations in Guizhou are currently normal. Imported phosphate rock prices are not competitive, as the use of phosphate rock primarily relies on domestic mining. Therefore, the domestic phosphate rock market supply remains tight. The prospects for downstream terminal phosphate fertilizers and phosphate chemical markets are positive, providing support for phosphate rock from the bottom up. In the short term, the phosphate rock market is expected to operate with a strong upward trend, although specific trends need to closely monitor changes in supply and demand dynamics.
