Hear Argus’ analysis of sulphur and phosphates market developments, including insight on supply, demand, pricing and the outlooks. This podcast is especially timely as it incorporates market sentiment from discussions during the Argus Fertilizers Caspian, Black Sea and Eastern Europe Conference held in Istanbul, 14-15 September 2023.
Join Maria Mosquera, Editor of Argus Sulphur, Bea O’Kelly, Senior Reporter - Sulphur and Tom Hampson, Reporter – Phosphates as they discuss these topics and more in the second episode of our new Fertilizer Matters podcast series.
Key topics covered in the podcast:
Phosphates market sentiment and outlook
• Market drivers including Chinese supply, buying patterns in India and Pakistan
• Affordability and stock levels in the Caspian Sea region and Eastern Europe
• Indian subsidy, Bangladesh tender, Chinese availability, demand in Europe & Brazil
Sulphur market sentiment and outlook
• Pricing sentiment, spot market liquidity, Chinese stock levels
• Developments in Caspian Sea region and the Mediterranean, Russian supply
• Demand from Indonesian nickel producers, price outlook
• Supporting slide pack available: Download here
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- Sulphur and sulphuric acid price reporting, short and mid to long-term outlook services
- Phosphate price reporting, short and mid to long-term outlook services
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Maria: Welcome to the second episode of our new fertilizer podcast series, "Fertilizer Matters." Today we'll be discussing the recent Argus Caspian Fertilizer Conference held in Istanbul mid-September and some key takeaways from the event on the phosphate and sulfur markets. I'm Maria Mosquera, the editor of Argus Sulfur, and I'll be speaking to phosphate reporter, Tom Hampson, and sulfur reporter, Bea O'Kelly, to find out what were the main topics of conversation at the Caspian Fertilizer Meeting and the main trends discussed in the phosphate and sulfur markets. Welcome Tom and Bea.
Tom: Thanks for having me.
Bea: Thank you, Maria. Great to be here.
Maria: To start with phosphate fertilizers, Tom, with the recent return of demand and a bit of a bull run on DAP prices in the east of Suez markets, coming on the heels of the Brazilian MAP import season, what was the mood at the event among phosphate market participants?
Tom: So at the moment, people are seeing prices staying firm for now, but participants are expecting, waiting for prices to maybe soften a little bit in around October time. It's really the east that's the market driver at the moment. So people are looking towards Indian subcontinent for where the demand is at and China for where a lot of the supply in that region is at. India, Pakistan, they've carried on buying a little bit more. China at the moment, supply has stayed reasonably tight and so that's what's been keeping prices high for the moment.
Maria: Interesting points about the global situation, Tom, how about the FSU and the Caspian region?
Tom: At the moment, the activity in the region looks to be fairly quiet. That's really driven by low-affordability fertilizers, DAP and also some of the markets already have stocks. They're in a reasonably good position, they don't need to buy so much more. It's more in the north where we're expecting to see demand start to come back in southern Europe, places like Italy, DAP demand, demand for phosphates has already started to return.
Maria: That's very interesting. Sounds like many useful conversations took place over the few days in Istanbul. Could you share with us a few pointers on the forward expectations for the phosphate market direction, supply, demand, prices, from the meetings?
Tom: For the meantime, it's still the east that's the main driver. The India subsidy hasn't yet been announced, so that's the nutrient-based subsidy. Prices have been high. They've got coming elections, so that would indicate a small cut, but I have heard recent indications that there might be a slightly more severe cut. If that happens, then that would make DAP less affordable. It would reduce demand and that would indicate a leveling off, softening of DAP prices. At the moment, as you said, we saw a real bull run in DAP prices recently, but over the last couple of weeks that price has leveled off and it's been more steady. Also in that region, Bangladesh, they've got a third private sector tender, which is closing this weekend.
Their second tender, they awarded 310,000 tons of DAP, 155,000 tons of TSP. In the first tender, there was 120,000 tons of DAP, 60,000 tons of TSP. However, issuing of an opening of lesser the credit, there seems to be some issues. So it's still unclear how much exactly has been secured under those tenders and that's driven them to issue this third tender, which will close this weekend.
In China, availability has been tight. We're expecting DAP exports to be about a million tons in the fourth quarter, but it'll be eyes on the Chinese domestic market. If demand is high, then that'll mean there'll be less available for export. If demand wanes, then potentially more will be freed up for export and that will increase the supply in the region. It's looking like run rates at production in China will remain steady, so there shouldn't be too much of a change in the supply being produced within China.
Maria: Thanks, Tom. Now moving on to the European region. How are you seeing the demand situation there?
Tom: In Southern Europe, demand for phosphates looking to firm. So that should support the high end of prices and that will slow down the softening of prices that we're expecting to see in around October. Otherwise, you'll get too much of a disparity between the low-end and the high-end of FOB prices. In Brazil, spot demand is likely to return and sales are likely to pick up. We have already seen 22,000 tons of Russian MAP sold at 535 CFR, so that's at the high end of our current daily range, but this is on the back of record imports already in January to August, 3.37 million tons of MAP has gone into Brazil, so indicates that they've got good stocks, but they are coming into their buying season for the next planting season. At the moment, globally, the outlook looks reasonably firm, but the trend is slowing. Brazil is, at the moment, the discount market so that price could firm up, but in the east when buying starts to slow, which we're expecting to see, prices should start softening.
Maria: Thank you for that phosphate outlook, Tom. Now turning to the sulfur market, sulfur will be to some extent subject to the phosphate market trend and in recent weeks spot prices have been pulled up by the returning phosphate demand. But what was the feeling among the Caspian Conference participants on the current sulfur market, Bea?
Bea: Hi, Maria. Thanks. Overall, most feel the market is bullish. And if we look at the global picture, there is demand, as Tom has said, from the phosphate markets and also from sulfuric acid markets as there's a supply shortage there at the moment. And firm prices look to continue for now, but there are some less bullish factors. Liquidity in the spot market is quiet, this is while fourth-quarter negotiations commence. There's some high FOB trades that have not yet turned into firm CFR sales as buyers are resistant of these higher FOB numbers, especially in China. And freight rates are up, which will push up the CFR levels, which is in turn making buyers a bit more resistant. And there's a lot of supply. You know, there's very high stock levels in China that's sort of 2.5 million tons, which is similar to the COVID-19 storage levels. So that's a global picture of what's going on at the moment.
Maria: And what about the Mediterranean region and supply from the FSU?
Bea: Yeah, so specifically in that region, as we heard at the conference last week, there are plenty of Russian tons reaching Baltic ports for export. There's a lot of supply and the one bullish factor at the moment, there's very high freights from the Baltic ports at the moment. There's a shortage of vessels and this is helping to support CFR numbers in the fourth quarter negotiations. So the market is not short of supply in this region and there's various outlets for Russian tons, Egypt, Turkey, Southern Africa, and there's also some length in the U.S. with very high refinery run rates over there. So there is a high sell for output west of Suez. Overall, the feel of the market is bullish for now, there is support from phosphates, there's support from sulfuric acid, but fundamentally there is some length and the phosphate price rally is expected to come to an end before the year is out, which will in turn weigh on sulfur market sentiment.
Maria: Interesting takeaways for the sulfur market. Now, how did participants see the outlook for the market going forward and what were the main comments around expectations for the future market, Bea?
Bea: Generally, people agreed things are firm, but only for now. So prices are expected to come down eventually. As I said before, there is plenty of supply and there's this underlying fundamental reason why the firmness is going to be relatively short-lived and is only supported really by the rally in phosphate prices and the sulfuric acid price gains. There could be slightly less Russian volumes being exported by barge as the Volga-Don River freezes in the winter. But this is unlikely to cause any big market impact as there's still plenty of tons to be exported from the Baltic ports. Kazakhstan continually keep moving as there are storage capacity limits there and there's continued length of supply from the U.S. refineries with really high refinery run rates over that side of the world. Some demand could come from the Indonesian nickel producers in the coming weeks, but this may not be enough to sustain the market firming to the year-end. So overall it is firm, but only for now.
Maria: Thank you for that breakdown, Bea. Some very interesting points raised there and a bit of a unanimous trend on expectations for the coming weeks from participants as well. Thanks to both of you, Tom and Bea. It's been great to get a firsthand account of delegate sentiment from the conference and some of the key topics of conversation, as well as the immediate future outlook for both phosphates and sulfur from participants.
This concludes today's episode. There's also a complimentary slide pack available to download with some relevant phosphate and sulfur prices, which you can find on the podcast page. Thanks for listening and please get in touch with any feedback on any of our content or anything else you'd like us to discuss in future episodes.