Romanian phosphates prices under pressure

Fertilizer distributors in Romania have lowered offer prices of DAP this week, as drought conditions and a projected fall in prices have contributed to weakened demand.

Offers of DAP in Constantza have fallen to as low as $327/t fca bagged this week from one distributor. The prices have been linked to product of north African origin. One distributor is offering Moroccan DAP at $336/t bagged fca Constantza as of this week.

These latest DAP offers mark a drop on previous levels. Argus assessed DAP at $338-340/t bagged fca Constantza last week, with Turkish material at the low end. Product had been offered at levels as high as $360/t bagged fca last month in Constantza. But a combination of dry weather, carryover stocks and an expected lowering of prices has sapped end-user offtake. DAP demand in the country is not expected to pick up until July, participants said.

Producers sharpen focus

Romania's strong agricultural economy and its positioning on the Black Sea has made it a battleground for phosphates suppliers.

The multitude of origins — with product from Russia, Morocco, Turkey, Tunisia, Bulgaria and Jordan in the mix — has contributed to the overall fertilizer pricing competitiveness in recent months. And the ramping up of NCIC's new DAP facility in Egypt will likely see even further jostling for market share. Romania is an increasingly important DAP import market in Europe, with imports hitting 315,000t on average in 2017-19, trade data show, up from just 148,000t in 2015.

Major players have stepped up their presence accordingly, with Moroccan phosphates behemoth OCP due to launch a new joint venture later this year. The producer announced in January its decision to launch a fertilizer logistical joint venture, Seefco, in equal partnership with the UAE's Al Dahra, highlighting the increasing importance major suppliers are placing on Romania.

Drought to hit grains output, exports in 2020-21

But current dry weather conditions, particularly in the eastern and southeastern regions, have had a notable impact on fertilizer offtake recently, with the US Department of Agriculture projecting a likely drop in grain production and exports under its most recent forecast this month.

Romanian grain production is forecast to drop by 2.6pc in 2020-21 from a year earlier. The wheat crop is due to fall to 8.3mn t in 2020-21, in the marketing year running July-June, from 8.6mn t a year earlier. And a lower harvest and higher domestic consumption will dent wheat exports by 11pc, falling to 5.4mn t.

By Harry Minihan