Decline in Chinese DAP Prices During April 2024 After Loosening Export Sanction
Decline in Chinese DAP Prices During April 2024 After Loosening Export Sanction

Decline in Chinese DAP Prices During April 2024 After Loosening Export Sanction

  • 03-May-2024 2:29 PM
  • Journalist: Patricia Jose Perez

The Diammonium Phosphate (DAP) market in China has undergone a dramatic shift throughout April 2024. After a period of controlled stability due to government export restrictions, a wave of change has swept through the industry. Previously, the Chinese government maintained a tight grip on DAP exports, effectively controlling the market within the country. However, in April 2024, a significant development occurred after the Chinese government loosened its export restrictions. This move, affiliated with ample supply, unleashed a surge of Chinese DAP onto the global market.

The sudden influx of DAP has created a situation of oversupply compared to current global demand. As a result, the market has experienced a potential price correction by a drop of 4.5% to settle at USD 530/MT, DAP, FOB Qingdao, China during the week ending 26th April 2024. Offers from traders in recent tenders have already reflected this increased competition, driving down prices. The expectation of even greater DAP availability in the coming months further intensifies the downward pressure on prices. While the market leans towards a price drop, some mitigating factors restricted the prices from a significant drop. Even before the relaxation of restrictions, Chinese customs authorities announced a timeframe for processing exports during April. This 10-day approval process added some friction to the export flow, potentially slowing down the price drop to a certain extent. Overall activity in the market was sluggish with low trading volume. Moreover, the downstream businesses in the domestic region were not placing new orders as the existing purchases were enough to fulfill ongoing needs rather than any significant expansion.

Global Tenders Attract Chinese Offers: Companies in Mexico and the Philippines issued tenders for DAP purchases, and Chinese suppliers jumped at the opportunity. Offers were submitted for shipments as early as late April, indicating a rush to offload excess stock. Meanwhile, the two major Chinese upstream Ammonia producers, crucial for DAP production, resumed operations. This further increased the domestic supply.

As per ChemAnalyst, the prices of DAP are expected to decline during May 2024 under the influence of a supply glut. While current April shipments are reportedly sold out, the anticipation of ample DAP supplies from May onwards is expected to dampen the overall market sentiment. Overall, the loosening of China's DAP export restrictions is foreseen to impact the global market. While the full extent of the price correction remains to be seen, buyers like India can expect a period of lower DAP prices in the coming months.

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