Adjustment and Upgrade of the Ammonium Phosphate Market in Narrow-Range Fluctuations


By Zhang Yuqing, China National Chemical Information Centre

1. Slow growth of capacity, stability of consumption

China’s phosphate fertilizer capacity maintained slow growth in 2015. The added diammonium phosphate (DAP) capacity was 1.00 million t/a, and the total DAP capacity reached 20.50 million t/a. The monoammonium phosphate (MAP) capacity was basically stable at around 18.50 million t/a. Under the pressure of environmental protection and enterprise benefit, more ammonium phosphate producers with weak competitiveness will shut down or make production shifts in future. New capacities will exist side by side with phased-out capacities. The ammonium phosphate capacity will basically be stable. The output of DAP in China reached 16.088 million tons during January-November 2015, 14.6% higher than in the same period of the previous year. The MAP output was 11.184 million tons, up 6.3% annually.
The consumption of phosphate fertilizers in China has been stable at 11.0-12.0 million tons (P2O5) a year since 2005. The apparent consumption of DAP was 8.863 million tons during January-November 2015, a drop of 10.1% from the same period of the previous year. The apparent consumption of MAP was 8.730 million tons, an increase of 5.9%. The main reason for the reduction of DAP apparent consumption was the drastic increase of the export volume, caused by the improvement of the export situation. Also, the consumption of phosphate compound fertilizers displaced some DAP consumption.

2. Increase of export

Export tariff policies in China were adjusted in 2015. Differential tariff rates for slack seasons and brisk seasons were eliminated. A unified export tariff rate of RMB100/t was implemented to encourage more active export of phosphate fertilizers. The export of phosphate fertilizers rose during January-November 2015. The export volume of MAP was 2.454 million tons (physical quantity), an increase of 26.6% over the same period of the previous year. The export volume of DAP was 7.225 million tons (physical quantity), an increase of 74.2%.
India, Southeast Asia, Pakistan, Bangladesh and the United States were the major export destinations. The amount exported to these five regions accounted for 91% of the total export volume. The three regions with the biggest increase in export volume from China were India, Bangladesh and Southeast Asia. The increases of the export volume were respectively 2.672 million tons, 0.328 million tons and 0.476 million tons with growth of 273.5%, 565.5% and 35.8%.

3. Flat price unlikely to improve in near future

Except for the drastic price rise due to the global economic crisis in 2008, the price trend of ammonium phosphate in other years was basically stable. The price of ammonium phosphate was flat in 2014 with a slight increase in the second half of the year. The price remained flat in 2015. Figure 1 shows the price trend of ammonium phosphate in China during 2010-2015.

4. Development of the sector

According to data from the National Bureau of Statistics, the main-business profit rate of the phosphate compound sector in China was 4.4% during January-November 2015, 0.9 percentage point higher than in the same period of the previous year. The profit rate of phosphate fertilizers was 2.0%, an increase of 0.6 percentage point but still low.
The problems in the ammonium phosphate sector today include a serious surplus of capacity, the weakening of profit-earning ability, the main-business profit rate being lower than the average level of the petroleum and chemical industries and the increase of environmental protection pressure.
The ammonium phosphate sector in China already boasts quite a few large enterprises, such as Yuntianhua, Kailin and Wengfu. Major raw materials for ammonium phosphate include phosphate rock, sulfur and ammonia. At the time when most of China’s sulfur is imported and there is no big range in ammonia cost, competitive edges of phosphate fertilizer producers will mainly come from the occupancy of phosphate rock resources, the elimination of low-efficiency capacity, differentiation of products and the formation of efficient resource utilization modes through industrial chain integration.