This year's recovery in US phosphate fertilizer demand will likely continue into 2024, but possible revisions to import duty cases on Moroccan and Russian product are clouding the supply outlook.
Phosphate supply would likely remain tight in 2024 if neither country exports any DAP or MAP to the US. Russia was the US' top source of imported MAP in the last fertilizer year (July-June). But a recent hike to Russian phosphate producer Phosagro's subsidy rate will probably curb its shipments to the US. Moroccan phosphate producer OCP's rate was lowered sharply, but the company has said it should face no import duties.
Supply concerns would ease if OCP were to resume DAP and MAP trade to the US. North American fertilizer producer Mosaic also indicated last month that it may increase phosphate production starting in the back half of 2024 to 2mn metric tonnes (t)/quarter from a recent average of 1.7mn t. That too would help loosen supply.
OCP used to be the US' biggest source of imported phosphate, but it ceased supplying the country with DAP and MAP when the US International Trade Commission (ITC) determined in 2021 that phosphate imports had materially injured the domestic fertilizer industry, and the US Department of Commerce levied import duties on Moroccan and Russian phosphate producers.
A slew of appeals followed in the months after, and in September, a US Court of International Trade judge said ITC's determination was not supported by sufficient evidence. The judge remanded the case back to ITC.
ITC has 120 days from the judge's decision to issue its remand redetermination. A subsequent comment period could last up to nearly 120 days.
Commerce on 29 April is set to release the preliminary results of its second administrative review of the countervailing duty order it issued in 2021 on Moroccan and Russian phosphate. The final results could take another six months to be released.
In November, Commerce issued the final results of its first administrative review. It lowered OCP's subsidy rate to 2.12pc from 19.97pc and raised Phosagro's to 28.5pc from 9.19pc.
US phosphate buyers will need to replenish depleted inventories over the next few months in preparation for the spring application season. Market participants are mixed on whether demand for spring needs will outpace supply. Some are optimistic about securing enough phosphate from the usual domestic and import sources, as well as nontraditional ones, and they noted that DAP, which is higher in demand in the spring, is more easy to source than MAP.
Others are less optimistic, citing the supply tightness and spot outages in the spring and fall 2023 that were exacerbated by poor conditions on the Mississippi River.
Winter fill demand has been stronger than expected during the past few weeks, bolstered by distributors taking product from Mosaic's allocation program.
Nola phosphate prices climbed as demand jumped. DAP prices rose to $570-580/short ton (st) fob Nola last week from $523-540/st fob in early November while MAP prices were up to $615-620/st fob Nola from $590/st fob a month earlier. Nola MAP and DAP were priced at a midpoint of $610/st fob and $612.50/st fob, respectively, in late December 2022.
The recent rise in Nola phosphate prices has not caused affordability concerns, and sources expect prices to soften some when demand cools.
To ensure sufficient spring supply, US phosphate consumers will need to compete with their global counterparts for imported DAP and MAP. Export restrictions in China, creating a global DAP deficit over the next four months, will likely make the market more competitive.
