20 October 2021 - Feed phosphate prices are hitting multi-year highs, buoyed by tight supply and high raw material costs.
Just as most Q4 feed phosphate contracts were finalised in Europe, news of initial feedstock phosphoric acid settlements emerged.
OCP reported it has agreed its Q4 phosphoric acid contracts with some of its European buyers at an increase of $240/tonne.
Buyers have not confirmed the increase, while the majority of OCP’s European contracts are set to follow the change seen in India when Q4 contracts are finalised there. The Q4 phosphoric acid contract with India has not yet been settled.
The phosphoric acid settlement between OCP and buyers in India is the benchmark index most often used globally. Buyers in India traditionally also buy product from China; however, the Chinese phosphate export ban means this will not be possible, and players speculated that this would drive the phosphoric acid price higher.
The Q3 northwest Europe phosphoric acid spot/contract settlement was seen at $1,212-1,347/tonne, which was the highest European average phosphoric acid price since December 2008.
OCP agreed its Q3 2021 phosphoric acid contracts with buyers in India on 5 July at $1,160/tonne CFR, up $162/tonne from the $998/tonne CFR Q2 contract. The deal marked the sixth consecutive quarterly increase from a low of $590/tonne CFR for the Q1 2020 contract.
Meanwhile, a two-tiered Q4 feed phosphate contract settlement has emerged in the European market, creating a wide price range across the region.
Early indications put Q4 feed phosphate contracts up by €70-90/tonne, bringing MCP prices to €720-780/tonne delivered northwest Europe in late-September, early October.
However, following the news that China would ban phosphate exports, some feed phosphate suppliers withdrew those offers.
The second round of negotiations took some feed phosphate contracts up to €850-900/tonne delivered northwest Europe in recent days.
With both settlements in play, Q4 feed phosphate contracts moved up by nearly 25% over Q3 levels to an average price of €810/tonne, according to Feedinfo market assessments.
Feedinfo previously assessed Q3 contract prices for MCP from €640-660/tonne DDP NWE. Contract prices for DCP were assessed from €510-530/tonne DDP NWE. H2 2021 contracts for those MCP buyers on six-month plans have been discussed from €630-650/tonne DDP NWE.
Yara raised its BOLIFOR® MCP in bulk price on 14 October to €850/tonne for November deliveries in mainland Europe, up from €800/tonne delivered earlier in the month.
"Prices are for November deliveries and could be withdrawn any time given that volumes are very limited," the company said.
In September, Yara offered BOLIFOR® MCP in bulk for mainland Europe at €720/tonne delivered plus bagging services of €25/tonne for big bags and €45/tonne for small loads. Yara's retail price for MCP in bulk for July delivery was €650/tonne.
In combination with the increased pricing, tightness was building across Europe as global fertilizer prices continued to spike.
"Different applications compete for the raw material and the trend is triggering some increased stocking demand," a seller said. "With increased pricing on all raw materials, phosphates are no exception."
"The MCP was more or less a battle for the volumes on Q4," a buyer said. "I had one supplier hold quite a decent volume at a reasonable price, but the others said, 'if you have a chance to get all/more volume with the other suppliers, please do so. We are not offering a lot into the market.'"
The buyer concluded Q4 contracts with two suppliers at a €200/tonne increase over Q3.
Another buyer said in early October, "We were already under contract with price increases from €100/tonne from Q3."
"Everything is increasing. Don't know which way to turn. Phosphates are going through the roof,” a buyer said. “MCP we see €720-725/tonne, and DCP we see €620-630/tonne."
According to buyers, Yara had very limited MCP to sell, and Lifosa had no product available for Spain, Portugal, France, or Italy. Suppliers Global Feed and Phosphea had limited volumes, according to buyers.
"Some producers only offer products on a monthly basis, and sometimes we can only book a limited volume without knowing the price," a buyer recently said. "The situation is terrible, and we are not sure to get the volume needed."
"Availability seems to be an issue from the Russian producers with both having significantly less material for the Benelux available," a premixer said.
The buyer quoted Q4 indications at €730-740/tonne in mid-September, before the news emerged from China.
Another buyer said its Q4 price rose by €150-190/tonne from Q3, bringing MCP values to €790-830/tonne, but noted that the price was not guaranteed for the entire quarter as in previous negotiations.
"Unfortunately, the price could continue to rise in the coming weeks," the buyer said.
“It is getting rather crazy and to be honest we are very nervous about continued supply of some key ingredients,” a premixer said on 19 October. “Our prices today for MCP were in excess of €880/tonne for Q4 deliveries. We are covered to end of Q4 but who knows where prices will end up and there are no Q1 quotes at all.”
Historically, buyers would supplement inventories with feed phosphates from China, but this has been more difficult amid a year of high logistic costs and reduced container shipping availability.
“I can confirm to you that sea freights push back offers coming from the other side of the globe,” a seller said.
MCP was offered for $700-750/tonne FOB China earlier this week, but quotes have stopped. Sellers say they will offer new prices next week.
The latest ban on phosphate fertilizers also has some concerned that shipping feed phosphate will become more difficult.
“There are only a few producers in China actually offering prices,” a buyer said. “There are many uncertainties still on the Chinese ban. How many tonnes and which exact products is still unclear. I did hear the Chinese ports are already blocking the fertilizer products.”
