Supply Chain Disturbances and Firm Demand Drives Global DAP Prices
Supply Chain Disturbances and Firm Demand Drives Global DAP Prices

Supply Chain Disturbances and Firm Demand Drives Global DAP Prices

  • 12-Oct-2023 5:45 PM
  • Journalist: Patrick Knight

During the second half of September 2023, a slight uptick in Diammonium Phosphate (DAP) prices was observed in the North American and European regions. This price increase can be attributed to various factors, including the escalating expenses associated with feedstock Ammonia, Phosphoric Acid, and upstream Natural Gas, robust demand for DAP from downstream sectors, and disruptions within the supply chain.

Initially, there was a substantial increase in DAP prices in North America. This surge was primarily attributed to the heightened demand for DAP from domestic and international fertilizer markets in anticipation of the upcoming winter planting season. However, as the month progressed, there was a slight decline in inquiries for DAP from the international market, particularly in Brazil. Buyers displayed reluctance to make substantial purchases, exerting downward pressure on import prices, thereby indicating a sustained softening of the Western market. On the supply front, an ample quantity of DAP was available to cater to end-users' requirements. These combined factors led to a balanced equilibrium between supply and demand in the market.

In Morocco, an earthquake in September significantly damaged a major feedstock Phosphoric Acid producer within the country. This unfortunate incident has caused a scarcity of supplies in the regional market and has pressured the export of DAP to India, Germany, and Turkey. Meanwhile, a consistent need within the agriculture sector drove strong demand for DAP from South Asia. As a result, this situation has led to a widening gap between supply and demand in the regional market, especially as fertilizer applications increase.

In the European region, the recent upswing in DAP prices can be attributed to a resurgence in demand from downstream industries, coupled with an increase in the costs of critical feedstock components such as Ammonia and Phosphoric Acid and upstream Natural Gas. During the final week of September 2023, complications arose in Norwegian offshore gas facilities, resulting in a reduced supply of Natural Gas to the Gulf Coast. This, in turn, exerted greater pressure on European DAP producers to import gas from the USA instead of relying on domestic production. The depreciation of the Euro against the US dollar has made these imports of Natural Gas in the European region more expensive. The heightened prices of feedstock Ammonia and upstream Natural Gas prompted increased production rates within the country, leading to a price increase in DAP in the European market.

Additionally, the demand for DAP from the downstream fertilizer market continued to be strong, with consumers building up their stockpiles in anticipation of the forthcoming planting season.

As per ChemAnalyst, it is expected that DAP prices will rise on a global scale in the coming months. This price increase can be attributed to the elevated costs of feedstock Ammonia and upstream Natural Gas. Additionally, robust demand from the downstream fertilizer industry is anticipated in the months ahead.

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