The international phosphate fertilizer market has shown a clear split last week. India’s rupee has sharply depreciated, and as a result, the country is unwilling to accept any price higher than the U.S. price of $520 CIF for diammonium. Despite this, sellers are still optimistic about India's ability to pay. However, with the rupee's continued decline, this situation is unlikely to hold.
Meanwhile, markets in Argentina, Uruguay, and Brazil remain active, with phosphate prices remaining stable. The U.S. market is also preparing for a seasonal inventory buildup before the fall, which is expected to support prices. In the short term, the Western Hemisphere market is likely to remain stable.
In the U.S., the price of diammonium on barges has started to strengthen. However, due to wide price variations across Latin American destinations, it's challenging for traders to reach agreements. Overall, the Western Hemisphere market remains stable, with Brazil, Uruguay, and Argentina showing strong activity.
In contrast, the Eastern Hemisphere market looks very different. Since April, the American Phosphorus Association reportedly secured a 400,000-ton deal with India at a CIF price of $520, with some rumors suggesting a discount from that level. Despite this, India has not made any new imports recently, but sellers still hope to sell at around $510 CIF. Saudi Basic Industries Corporation (SABIC) is currently offering at that level. Meanwhile, China’s diammonium prices are based on a $10 discount from $510, leaving Chinese manufacturers with only minimal profits. Some are even offering as low as $505, though Yuntianhua recently rejected such offers. Currently, 500,000 to 700,000 tons of diammonium are being traded at around $510, with 3 to 4 ships in transit.
India’s slowdown in purchasing is primarily due to a nearly 5% depreciation of the rupee against the dollar in just one month, bringing the exchange rate close to its lowest level since June 2012.
Looking ahead, the medium-term outlook for phosphate fertilizers remains uncertain. However, one thing is clear: India will only purchase spot goods, and the volume will decrease. Prices will likely be valid only for short-term delivery to manage potential raw material price drops and currency fluctuations. India has already imported 1 million tons of diammonium and doesn’t need more in July. It will require another 3 to 3.5 million tons before November, with pricing to be decided closer to the time.
The key question now is how Chinese manufacturers will act in June. There is a growing sentiment that they are eager to lower prices to export diammonium to India. One reason is to ease domestic inventory pressure and avoid a potential price drop. Additionally, China aims to reduce the operating rate of diammonium production to 70–75%. However, if China sells diammonium to India at an FOB price of $490, suppliers’ profit margins would be extremely thin. The question is whether several manufacturers can sustain such low prices.
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