Diammonium Phosphate Prices Surge Globally Amidst Supply Chain Constraints

The Diammonium Phosphate (DAP) market surged in the European and North American regions throughout the second half of November 2023. This price surge is primarily attributed to a shortage of DAP and its essential feedstock in the regional market and disturbances in the supply chain. Further, escalated prices of essential raw materials, particularly natural gas and Ammonia, and heightened production costs have also exerted upward cost pressure on DAP prices.

In the second half of November 2023, DAP prices in the European region underwent a substantial upswing, driven by a confluence of factors impacting the fertilizer market. One of the key contributors to this surge was the notable increase in the costs of essential raw materials, specifically Natural Gas and Ammonia. Major exporting nations, including the USA, experienced this escalation, prompting producers to be cautious in expanding DAP production. Compounding the situation, a shortage of gas pipelines further constrained the availability of critical raw materials. Simultaneously, persistent bottlenecks at the Panama Canal added another layer of complexity, resulting in extended queues for ships. These disruptions impacted shipping schedules and led to a subsequent rise in transportation costs, directly affecting the efficient flow of DAP shipments into the European market. Moreover, the cautious approach adopted by producers, influenced by rising costs and logistical challenges, contributed to a reduction in DAP exports from the USA to Europe. The announcement from the Norwegian chemicals company Yara regarding a temporary halt in Ammonia and its derivatives, including DAP production, for the next two months added another dimension to the supply dynamics. This announcement can potentially create a surge in spot demand for volumes, exacerbating the already existing shortage of DAP in the European market. The culmination of these factors has widened the disparity between demand and supply in the European fertilizer market, providing a strong support base for the intensified pricing of Diammonium Phosphate.

Likewise, DAP prices continued to follow an upward trajectory in the North American market, albeit with a marginal increase. The upswing in prices is attributable to the increasing costs of the feedstock Natural Gas within the country, consequently elevating production expenses and subsequently impacting DAP prices. Furthermore, recent adverse cold weather conditions in the United States caused disruptions in energy delivery, leading to a ripple effect on gas prices. Consequently, producers exercised caution in expanding DAP production due to the escalating costs of feedstock. On the demand side, modest demand was observed from the international market, particularly Brazil. This factor contributed to the overall dynamics of DAP prices in the North American market. The marginal increase in prices, coupled with the careful approach of producers in response to cost pressures, illustrates the intricate interplay of factors shaping the DAP market in the USA.

According to ChemAnalyst, DAP prices are expected to experience a marginal increase in the upcoming months. This anticipation is based on the factors of rising feedstock prices and potential supply shortages. The interplay of these elements is foreseen to contribute to a gradual upward trend in DAP prices, reflecting the broader market dynamics and conditions.