The worldwide phosphoric acid sector is undergoing a protracted slump due to factors such as oversupply, low fertilizer consumption, and scrapped tenders across India and Bangladesh affecting market sentiment. Abundant stocks, budget constraints, and robust exports from China are putting prices under pressure, and minimal seasonal support is anticipated.
The global Phosphoric Acid market is experiencing an extended downturn as demand weakens, and systemic over-supply disrupts trade. Fertilizer producers and buyers face increasing issues with fertilizer phosphate derivatives, particularly DAP and MAP thereby influencing the Phosphoric Acid demand towards lower side. Weak agricultural demand, particularly from important importing regions, has created a knock-on effect through the value chain. Existing phosphate stockpile is too high to safely store at custom storage facilities, regardless of Phosphoric Acid price declines, meaning that buying new phosphate is neither attractive nor advisable. Turkey and Europe have similar issues, where farmers are holding off on purchases because they are not confident about fertilizer affordability against crop revenues. Farmers are concerned about the affordability of fertilizers for their budgets set against expected revenues from higher-than-average prices for recent years.
On the downstream markets, tender disruptions also cause instability in the market. For example, Ethiopia has effectively just finalized a tender for DAP (di-ammonium phosphate), and even though several suppliers in China are being competitive with bids, it will take too long to implement to respond to 300,000 tons of additional demand.
Bangladesh has canceled its private sector tender for phosphate fertilizers due to legal complications while India's state-owned GSFC has likely cancelled a large DAP tender. Both of these have removed critical Phosphoric Acid demand anchors from the market, contributing to the already prevailing uncertainty. China's role as a significant exporter of Phosphoric Acid adds to this uncertainty, as producers are fierce pricing their shipments domestically to unload inventories; the general window for exports is closing soon. Competitive offers in Pakistan and redirected cargoes from delayed tenders demonstrate steps to push Phosphoric Acid inventories on the world market. However, increasing overall Phosphoric Acid supply globally has the potential to escalate commodity supply in intervening regions like Southeast Asia, where buyers have already begun to show reluctance.
According to ChemAnalyst's forecast, the Phosphoric Acid price is prognosticated to experience either stable or soft conditions. Seasonal purchasing behavior associated with winter crop cycles may deliver some respite, however widespread affordability pressures and excess inventories are forecasted to drive trading behavior. Producers are tasked with the responsibility of cutting Phosphoric Acid prices to align with buyer budget capabilities particularly in Brazil and Southeast Asia. The unravelling of pending tenders and timing of production schedules may provide some stabilization in trade activity, but the Phosphoric Acid marketplace remains in a corrective phase.
