Quarterly Update on Global Diammonium Phosphate (DAP) Market
For Quarter Ending June 2021
Improvement in farming activities under improved weather conditions increased the demand for Diammonium Phosphate (DAP) in USA during the second half of the quarter. Initially in April, DAP prices observed decline due to ample spot availability in the country and staggering demand. However, in the second half of the quarter prices gained upward momentum supported by clear weather and increased offtakes from end users. Therefore, prices of DAP reached USD 624/MT in the mid of June. In addition, amidst stable offtakes, availability remained sufficient to satisfy the need and thus the prices-maintained stability throughout the last month of June.
Diammonium Phosphate demand in Asia remained firm during this quarter amidst critical shortage across the region. In India, an astonishing rise of around 40%-60% was observed in retail prices of DAP during end of May, backed by strong demand and firming feedstock value. Therefore, with firm demand outlook prices of DAP hovered around USD 509/MT during May ending 2021. To counter the huge spike in prices, government had to intervene to provide subsidy and safeguard farmer’s interest. Similarly, in China, prices of DAP shot steeply in the meantime, due to high import demand from Bangladesh and other global market.
High global demand raised prices of Diammonium Phosphate in Europe during Q2 2021. Import demand of Europe remained high in the meantime and traders were ready to pay high prices on cargoes coming from India and Middle East. In addition, increase in feedstock Ammonia and Phosphoric Acid prices due to shortage, also contributed to the rise in DAP prices in Europe. On the demand side, demand for DAP from end users remained high enough to encourage this steep rise in the region.
For the Quarter Ending March 2021
DAP remained resilient from Q4 2020 across the region and globally during Q1 2021, hence the price acceleration continued, further affected by winter storm hit US gulf. This price acceleration was due to the shortage of upstream materials, like Nitrogen. Several Nitrogen producers shut their plant operations under extreme cold which eventually led to the shortage of feedstock Ammonia. Under these conditions prices of DAP skyrocketed across the region and reached USD 576.7/MT till March. This price hike was also supported by high local demand which eventually led to increased dependency for imports from Europe.
The Asian region saw moderate to low domestic demand for DAP, but high export demand from the US and Europe. Domestic demand for DAP in China remained moderate, but export demand was higher than anticipated, owing to a shortage of local material caused by lower availability of upstream natural gas, which effectively forced prices to rise in the region. Meanwhile in the Indian DAP market, domestic demand from the agriculture sector was low, hence the producers increased their exports to satisfy high demand coming from the US and Europe. Despite of stable demand from the Indian markets, retail prices of DAP showed a sudden increment of more than 50% during the quarter, buoyed by the global upsurge in rates.
Europe witnessed high demand for DAP from the agriculture sector due to the arrival of spring season. As the demand from domestic and international market was high, manufacturers were looking forward to increasing the prices of DAP in the coming months. Shortage of DAP in the US also forced European manufacturers to enhance their export volumes to enhance their margins and high premium on prices.
For the Quarter Ending December 2020
Asian Diammonium Phosphate market remained firm in Q4 2020 driven by its appreciable consumption from the fertilizer industry. In China, before November, domestic supply of phosphate fertilizers was deemed low, as various manufacturers were more inclined towards catering to the global demand under expectations of better netbacks. By November, DAP imports from USA considerably reduced that created a shortage of DAP and other phosphate fertilizers in various countries across the region. Besides, favourable weather conditions amidst rabi season provided a favourable push to DAP’s market sentiments in India.
In early Q4 2020, tight supply of DAP and other phosphate salts in the region accelerated the prices of most agrochemicals. The tight supply was a repercussion of the lower production rate due to damage caused by a spate of hurricanes in October. Later in December 2020, the demand remained firm, but the supply marginally decreased, which again caused a rise in DAP prices. Although the month over month increment in the regional production rates gradually eased its prices by December end.
In Europe, the demand for DAP remained low, as only few countries participated in the spot buying activities while most of them stayed muted. Although the production of agrochemicals continued to be low due to movement restrictions amid rapid spread of COVID 19. In anticipation of good demand in spring season, several buyers asked for early contract purchases of DAP that increased the imports and its prices respectively by the end of Q4 2020.