The market continued to be divided between steady business west of Suez at stable prices and weak sentiment in the east due to a lack of Indian buying activity. A major factor is the surging DAP stocks in the domestic region, as laid out in the recent FAI statistics. At the end of July 2016, Indian DAP stocks for April-July stood at 1.3mn t, around 400,000t higher than that in June. Add in subsidy uncertainty and falling prices and importers are reluctant to pull the trigger.
This has pressured Chinese DAP fob prices into the high-$320s/t fob. In Pakistan, Fauji's backing, also believed to be of Chinese origin, would net back to the mid- $320s/t fob at best. A turning point for this market could be the re-emergence of the Chinese domestic demand, of which an improvement has been noted.
In Latin America, Argentina was active as buyers geared up in earnest for the upcoming soybean season and prices were moving accordingly, taking this uptick in demand into account. Argentina was understood to have purchased a Russian DAP/ MAP cargo in the high-$350s-low- $360s/t cfr range. This underscores the fact that prices in the region were firming; indeed Argus FMB assessed the Brazilian MAP cfr price higher.
In Europe, Turkey seems to be another hotspot of activity. Jordan's JPMC confirmed it will ship around 90,000t of DAP to Turkey, possibly going up to 100,000t, during August. Between GCT and JPMC, Turkish demand looks to be comfortably met.
Granulation at OCP's second 1mn t DAP/MAP/NPK plant atJorf Lasfar started but no product was on offer from this line.
OCP Morocco August commitments ('000t)
- Brazil 150
- US 110
- Europe 120
- Africa 100
- TOTAL 480
- PRODUCTION 650
- BALANCE 170
The Ministry of Agriculture (MoA) is expected to announce its 2017 fertilizer import requirement in September. It is anticipated that the MoA will request for a total of 100,000t, of which around 20,000t will be for DAP. The rest will be allocated to NPKs, urea and CAN.
A quiet end of August allowed the market time to take stock of recent price moves in Brazil and the US, as well as a chance to gauge fourth-quarter potash demand. Prices were unchanged, although suppliers reported strong demand and tightening supply.
Canpotex, APC and BPC all said they were sold out of MOP until at least October, with supply limited until the end of the year. Suppliers attributed the high demand to the China and India contract deals, as well as early purchasing for spring by European buyers, and solid demand in Brazil. Any tightness in supply is likely to be temporary though, and buyers in regions like Brazil and southeast Asia say they are in no hurry to buy. It remains to be seen as to whether the market upwardly adjusts prices on the news of limited supplies.
China’s MOP imports slumped by 72pc in July, compared with July 2015, according to GTIS data, a reflection of the delay in signing annual seaborne import contracts this year. Suppliers are busy sending MOP to fulfil contractual obligations though, and imports to China was likely to increase steeply for this August and September as a result.
Indian stocks were down by 16pc since, but scheduled vessels for September indicated that over 130,000t of MOP was heading to the country. Just under 350,000t was projected to arrive in India for August, compared with imports in July at just over 450,000t.
Canada, Russia and Belarus MOP exports were all down on the year in January-May. But exports are likely to pick up in the second half of the year as a result of contract deals signed with India and China, and buyers' confidence in pricing relative to the contracts.
Small lots of 100-500t were sold in west, east and southern Africa, but producers expect demand and prices to pick up in the fourth quarter. Prices were unclear, given the small lots, and sellers expect a better indication of market sentiment in September or October. Producer price expectations are in the $270-275/t cfr range for granular MOP.
South Africa’s imports of MOP totaled 18,437t in June, compared with 27,866t in May, GTIS data showed. The country imported just 509t in June 2015, so the figure for the corresponding month of 2016 equates to a huge 3,523pc year-on-year increase. From January to June 2016 inclusively, South Africa imported 83,077t of MOP, an increase of 10pc on the 75,352t that it took in over the first six months of 2015. Germany was South Africa’s top MOP provider in the opening half of this year, supplying 38,211t, 46pc of the 83,077t total.
Source: Argus FMB