Global Diammonium Phosphate Market Faces Price Surge Amid Supply Shortages and Rising Feedstock Costs
- 02-Nov-2023 5:32 PM
- Journalist: Jai Sen
In the second half of October 2023, the Diammonium Phosphate market saw a notable price increase in both the European and North American markets. A limited supply of the material primarily drove this price surge worldwide and higher prices for key feedstock elements such as Ammonia, Phosphoric Acid, and the upstream cost of Natural Gas.
The Diammonium Phosphate import market in Germany experienced a substantial price increase, which can be attributed to several factors. This surge was primarily triggered by the rising prices of crucial feedstock materials like Ammonia and upstream Natural Gas in European exporting countries and limited material availability. The European gas hubs observed a bullish trend, leading to restricted production of Ammonia and its derivatives, including Diammonium Phosphate, in the region. Producers were cautious about expanding production due to the escalating costs of feedstock. Additionally, BASF, a prominent chemical producer in Europe, announced a reduction in production rates and the closure of several energy-intensive facilities, including two vital Ammonia plants and related fertilizer facilities. This decision resulted in a shortage of materials in the German market, prompting German manufacturers to import from the US market. The weaker Euro compared to the US Dollar also increased the costs of Diammonium Phosphate imports in the German market.
Furthermore, the ongoing crisis in Ukraine, particularly the conflict with Russia, has significantly impacted fertilizer production and supply. Participants in the fertilizer industry are currently facing challenges because the Russian invasion of Ukraine has led to an immediate suspension of fertilizer loadings, including Diammonium Phosphate, at the key export hub of Yuzhny.
Similarly, in the North American region, there has been a persistent shortage of Diammonium Phosphate in most areas, making it challenging to meet the growing demand in certain regions. Additionally, Trinidad, the primary exporting country of feedstock Ammonia, has been facing difficulties with natural gas supply for several weeks, resulting in restricted production of Diammonium Phosphate in the region. Producers have been cautious about expanding their production capacities due to the rising costs of feedstock. Furthermore, various market participants have reported that the transportation infrastructure in the US has been under strain this week, with low water levels in the Mississippi River, shortages of railcars, and limited truck availability. These combined factors have contributed to a scarcity of Diammonium Phosphate supplies in the US market.
According to ChemAnalyst, Diammonium Phosphate prices are expected to increase globally in the coming months. This price surge can be attributed to the tight supply situation in the global market and the elevated prices of essential feedstock like natural gas.