Starting from November 28, 2024, rumors have circulated that China may halt the export of phosphate fertilizers, including monoammonium phosphate (MAP) and diammonium phosphate (DAP), from December 1 onward.
This news has sparked significant market attention. Notably, a similar export suspension occurred during the same period last year (2023), lasting until mid-March of this year when exports resumed. Such policy adjustments have profound implications for the global phosphate fertilizer market, affecting both supply and prices.
This article analyzes the key factors influencing MAP price fluctuations, including raw material costs, market demand, supply chain issues, policy interventions, and currency fluctuations, while also exploring the potential impacts of China's export suspension.
I. Key Factors Influencing MAP Prices
1. Raw Material Costs
Phosphate Rock Prices:
Phosphate rock is the core raw material for producing MAP, and its price fluctuations directly affect production costs.
Morocco as a Key Supplier: Morocco, the world’s largest exporter of phosphate rock, plays a pivotal role in global supply. Any changes in Morocco’s export policies or restrictions could significantly impact global markets. For instance, an export limitation by Morocco could reduce global supplies and directly drive MAP prices upward.
China's Tight Phosphate Rock Supply: China’s restrictive mining policies to conserve phosphate resources have led to a tight domestic supply, keeping prices high and further increasing MAP production costs.
Ammonia and Natural Gas Prices:
Ammonia, a critical chemical raw material for MAP, is heavily influenced by natural gas prices. The European energy crisis led to a surge in natural gas prices in 2022, significantly increasing ammonia production costs, which in turn drove up MAP prices.
Sulfuric Acid and Sulfur Prices:
Sulfuric acid, another essential raw material for MAP production, has seen price volatility due to sulfur price increases. In 2023, higher sulfur costs raised sulfuric acid prices, indirectly pushing up MAP production expenses.
2. Market Demand
Agricultural Demand:
Tech MAP (12-61-0) is widely used in agriculture, particularly for producing water-soluble fertilizers.
In regions like Asia and Africa, the development of water-soluble fertilizers has boosted MAP consumption. For example, in Southeast Asian countries like Vietnam and Thailand, agricultural modernization has increased reliance on water-soluble fertilizers, gradually replacing traditional fertilizers.
With rising global food demand, especially in major agricultural economies like Brazil and India, MAP demand has continued to grow. In Brazil, large-scale MAP procurement during planting seasons significantly influences global market prices.
Rising Demand from the New Energy Sector:
MAP is a crucial raw material for producing lithium iron phosphate (LFP) batteries. The rapid development of the electric vehicle (EV) and energy storage industries has sharply increased Tech-grade MAP demand.
Growth in LFP Battery Production: In 2023, China’s LFP battery production rose by 77.3% year-on-year, and by April 2024, production increased by 92.5% year-on-year. This continuous growth has directly driven demand and prices for Tech MAP.
3. Supply Chain and Logistics Issues
Limited Production Capacity:
MAP production requires significant investment and strict environmental regulations. Production limitations in major producing countries like China and Morocco, whether due to environmental inspections, equipment maintenance, or capacity reductions, can lead to supply shortages. For instance, in early 2023, environmental inspections in China forced some phosphate fertilizer producers to cut output, reducing export volumes and pushing prices higher.
Logistical Bottlenecks:
Global transportation costs, including fluctuating oil prices and port congestion, can influence MAP’s international price.
In 2024, although container freight rates fell, bulk shipping costs remained high. For instance, freight rates from China to the Middle East and Southeast Asia rose by approximately 30% compared to 2023.
The low water levels in the Panama Canal have also disrupted cargo flow, increasing transportation costs from China to Europe and South America, indirectly raising MAP prices.
4. Policy and Geopolitical Factors
Export Policies:
As major MAP suppliers, the export policies of countries like China and Morocco have a direct impact on global prices. For example, at the end of 2023, China imposed export restrictions on MAP (including 12-61-0), tightening international supplies and rapidly driving up prices.
Geopolitical Risks:
Geopolitical conflicts, such as the Russia-Ukraine war, have disrupted supply chains and affected fertilizer exports from Russia and its allies, exacerbating global supply shortages and increasing MAP prices.
5. Currency Fluctuations
Cost Increases Due to Currency Depreciation:
Since MAP is traded globally and priced in US dollars, currency depreciation in major importing countries increases procurement costs. For example, in emerging markets like India, currency devaluation could raise MAP import costs, further driving up domestic prices.
II. The Impact of China’s MAP Export Suspension
1. Global Supply Implications
Severe Supply Shortages:
China accounts for over 35% of global MAP exports. Any suspension of exports would quickly reduce global market supplies, especially affecting countries in Asia, Africa, and South America that rely heavily on Chinese MAP.
Increased Dependence on Other Suppliers:
With China halting exports, markets may turn to Morocco, Russia, and other suppliers. However, the limited production capacity of these countries may not fully offset China’s supply gap, leading to continued tightness in the global MAP market.
2. Price Impacts
International Price Surge:
China’s export suspension would trigger a sharp rise in international MAP prices. For example, in 2023, export restrictions pushed MAP prices from $780/ton to $850/ton. A similar scenario in December 2024 is likely to cause further price increases.
Increased Downstream Costs:
As a key raw material for water-soluble fertilizers and the new energy sector, rising MAP prices will elevate downstream product costs. Agriculture production costs will rise, impacting food prices, while LFP battery production costs in the energy sector will also face upward pressure.
3. Impacts on Global Agriculture
Agricultural Production Challenges:
Major agricultural economies like India and Brazil that depend on Chinese MAP could face fertilizer shortages, driving up planting costs and threatening food security, with ripple effects on global agricultural markets.
Increased Demand for Alternative Fertilizers:
A shortage of MAP might lead to higher demand for alternative phosphate fertilizers, such as diammonium phosphate (DAP) or NPK compound fertilizers, further pushing up prices across the fertilizer market.
III. Conclusion
The price fluctuations of monoammonium phosphate (MAP) are driven by multiple factors, including raw material costs, growing demand, supply chain bottlenecks, and policy interventions. As the world’s largest producer and exporter of MAP, China’s export policies play a decisive role in shaping the global market. With China’s suspension of MAP exports, the global market faces mounting pressure from supply shortages and rising prices, posing challenges to both agricultural production and the cost structure of the new energy industry. How the global market addresses the supply gap caused by China’s export suspension will remain a critical issue in the months ahead. Attention: The above information is for commercial reference only due to the diversity of information collected, and Kelewell is not responsible for the authenticity of the data.
Comments