Market getting uglier; Chinese face Catch-22

摘要

As one trader put it, 4Q is usually ugly for sellers in the phosphates market, only this time it is more so. Chinese producers in particular face a major dilemma. Domestic market conditions are lacklustre and international cfr DAP prices are edging down in key export regions. Added to this there is uncertainty over the 2017 export tax policy. A total removal would theoretically benefit producers by around $15/t but in reality this is more likely to encourage traders to short sell against whatever residual demand exists in India and Pakistan and push fob levels lower. At the same time Chinese producers face significantly rising raw material costs, particularly in the sulphur market which is running higher counter-intuitively to a DAP market in the doldrums.