Higher Feedstocks Prices and Pressurized Supply of Fertilizers Constrained the Phosphoric Acid Market

Since the starting of 2022, the Phosphoric Acid market has been observing strong fluctuations in the market dynamics with an indirect impact of the gyrations in the Crude Oil market against the consistent demand from the downstream industries. Whereas before that, the uneven pandemic recovery led to the rapid firming in 2021 coupled with the restriction imposed by the Chinese authorities to restrict the exports of Phosphate based fertilizers to the overseas market. Although, according to several market sources, the resumption of the Phosphate based fertilizers will likely resume in the mid of the second quarter, strongly speculated on the Chinese spot market.

In the first quarter of 2022, the offered quotations from the manufacturers accelerated drastically, which is driven by the rising food pricing index. According to the UN FAO, currently, the food pricing index is hovering at historic highs and the situation has worsened since the conflict between Russia and Ukraine break out in the eastern European region. Whereas, the Russian authorities imposed the additional duties on the exports of fertilizers to the overseas market to protect the interest of the domestic market. That presented several changes to the agricultural-dependent economies such as India, which were forced to subsidize the raw input in the fertilizers segment as the majority of volumes of Phosphoric Acid are imported from the overseas market. Seeking the situation, the Indian authorities with the market players paced up the self-reliance for fertilizers front and putting policies in place aimed to achieve the target rapidly. Whereas, in the western hemisphere there were constant talks and discussions to seek out alternatives amidst the upcoming peak season from the domestic market in Europe, at a time when the buyers were reluctant to procure the Russian cargoes. A major western market participant predicted that the impact of the sanctions on Russia was expected to increase with time perhaps take months to realize or predict.

As per ChemAnalyst, the current swindling in the Crude Oil market has impacted the Sulphur market immensely and the contract negotiations for Sulphur supplies during the second quarter are likely to remain high with a substantial loss in the availability of Phosphoric Acid and fertilizers.