London, 14 November (Argus) — Market analysis

London, 14 November (Argus) — Market analysis

The US MAP price is hemorrhaging, dropping around $10/st earlier this week to hit $246/st fob (although Mosaic did report sales at $250/st subsequently) - another record low.

The price equates to $265/t cfr equivalent. Brazil also softened with prices now below $300/t cfr with 14,000t of Russian trading and reports of much more for 1Q.

The US has already ramped up exports to relieve pressure on the domestic market. Argus analysis shows that third quarter phosphate exports nearly doubled year on year to 346,000t DAP/MAP. And yet high inventories continue to characterise the US market, the result of a string of poor application periods that began in late 2018.

Mosaic's Catch-22

Mosaic has limited options. It could cut production further, but that looks unlikely beyond the 500,000t/4Q cut seen at Faustina. Nutrien last week called further cuts futile as this would just encourage more imports. Alternatively it can push more tonnage offshore. But demand is weak currently. And the concern is that more exports as a result of a weaker US market will drag Brazilian MAP prices down in the process.

India DAP cfr price falls, Iran tenders

A new reference price was established in India this week, down $5-8/t to $320/t cfr for 20,000t of Russian DAP. This was likely done at the beginning of November. But it will pressure Chinese fob levels in turn towards $300/t fob. Offers are around the low-$320s/t cfr in Pakistan, suggesting India is closer to $315/t cfr.

China, facing a lacklustre domestic market, may garner some support from ASSC's 70,000t DAP purchase tender in Iran.

Europe drops, Eurochem mulls cuts

The European arena is competitive but slow. DAP prices in northwest Europe edged lower this week. Eurochem sold DAP to Germany in the low-$330s/t fca down from $340/t fca in late October, and further cargoes will be headed to France, the UK and Ireland. Eurochem is currently mulling cuts at its Lifosa plant in Lithuania that would reduce DAP output by 15,000t/month.

Weather a major factor

Bush fires in Australia, delays to the rabi season in Pakistan and India and continued concerns over the US climate have certainly dampened sentiment.