DAP Prices Soar in North America and Europe Amidst Strong Demand and Supply Chain Disruptions
DAP Prices Soar in North America and Europe Amidst Strong Demand and Supply Chain Disruptions

DAP Prices Soar in North America and Europe Amidst Strong Demand and Supply Chain Disruptions

  • 15-Sep-2023 5:53 PM
  • Journalist: Harold Finch

In the second half of August 2023, there was a notable increase in Diammonium Phosphate (DAP) prices in both the North American and European markets. This price surge can be attributed to various factors, including shifts in international demand for fertilizers, including DAP, supply chain disruptions, and heightened freight costs. Additionally, Anhydrous Ammonia, a key component, saw an upward trend in the European region but remained relatively stable in North America during the same period.

The DAP market exhibited a consistent upward price trend in the United States, primarily due to robust demand from international markets, particularly Brazil. Brazil's agricultural focus on Corn and Soybean cultivation for the year drove demand for various fertilizers, with DAP being a significant component. Furthermore, domestic demand for DAP surged as buyers proactively made purchases in anticipation of the hurricane season. Tropical Storm Idalia threatened the Gulf Coast and Florida, further exacerbating the need for precautionary measures. Hurricane Idalia also significantly impacted production activities in the country, prompting Kinder Morgan to close its Port Manatee, Port Sutton, and Tampaplex terminals, all of which handle fertilizers, including DAP, resulting in a pronounced supply shortage within the country.

On the other hand, DAP prices experienced a substantial upswing in the European region during the second half of August 2023. The primary drivers behind the DAP price surge were the escalating costs of feedstocks such as Ammonia and Phosphoric Acid in the region. Regarding demand, procurement orders from domestic and international markets remained robust throughout this period. Consumers were building their stockpiles in preparation for the forthcoming Wheat, Rye, and Barley planting season in the domestic region. Furthermore, amidst the growing inflationary pressure in the region, manufacturing units were operating at a reduced pace, leading to a scarcity of materials in the market. According to data from the Russian Fertilizers Production Association, Russia had fulfilled 80% of its annual supply by the second half of August. Additionally, there was a current shortage of spot availability in the Ammonia market, primarily because producers were focused on fulfilling existing supply contracts, further exacerbating the supply situation.

As per ChemAnalyst's analysis, DAP prices are expected to increase further in the coming months because of the escalating expenses associated with its primary ingredient, Ammonia, and the robust demand from the fertilizer industries that use it. Additionally, variations in the pricing of natural gas and crude oil, which are upstream components, are anticipated to fuel the upward trajectory of the product prices.

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