Friday, March 29, 2013

Rising railway freight to further lift phosphate fertilizer purchasing cost

With the coming consumption season, the price of phosphate fertilizer has generally followed an uptrend, topped by that of DAP. As of mid-Jan., 2013, the price of DAP rebounded from the bottom point and maintained a continued upward trend over one month. With the additional factor of rising freight charges, the purchasing price of different varieties of phosphate fertilizer will be revised upward again, according to CCM’s latest issue, “Phosphorus Industry China Monthly Report 1303”.
On Feb. 19th, 2013, China's Ministry of Railways announced a price hike in railway freight charges, which took effect as of Feb. 20th, 2013. With a growth of nearly 13% compared to previous railway freight charges, it will push up the purchasing cost of products including phosphate fertilizer.

According to the feedback from most phosphate fertilizer enterprises, they agree that this price hike will have a greater impact on phosphate fertilizer than other goods. As the transportation of phosphate fertilizer from the original production area to the final consumption areas generally covers a distance of over 2,000 kilometres, it is preliminarily estimated that the increases in the railway freight charges of phosphate fertilizer could reach USD4.78/t at least.

Furthermore, the effect of the price hike of railway freight charges will also spread to other products related to phosphate fertilizer, such as feedstock of phosphate fertilizer——phosphorus ore and liquid ammonia. Therefore, the delivered price of phosphate fertilizer will increase by no less than USD7.96/t.

However, it is forecasted that the price uptrend of various varieties of phosphate fertilizer will be moderate.

Since 2007, China's Ministry of Railways has made 11 adjustments to railway freight charges, including three adjustments involving fertilizer. Relatively speaking, this adjustment was milder than the previous one with a 14.9% increase on July 1st, 2009. In the meantime, China's fertilizer is still enjoying the exemption of Railways Construction Funds.

Moreover, the overall demand for phosphate fertilizer hasn't exhibited any surge in China despite the coming traditional consumption season of phosphate fertilizer. According to the statistics from China's Phosphate Fertilizer Industry Association, it is predicted that the prevailing supply of phosphate fertilizer will be sufficient during the spring of 2013, which means that there is limited potential for price rising of phosphate fertilizer.

Besides, the international FOB price of phosphate fertilizer still remained low in Feb. 2013, which might generate resistance against any price rising of domestic phosphate fertilizer.

In the meantime, it is also suspected that China's farmers will not accept the rising price of phosphate fertilizer and thus sluggish sales might result.

Yichang City draws up blueprints for local phosphorus industry
Yichang City to build a mining right exchange for phosphorus ore
Yellow Phosphorus
Integration grows in the yellow phosphorus industry
China's phosphate ammonium market forecasts unstable supply in 2013
Newyangfeng Fertilizer to go public by reverse merger
Rising railway freight to further lift phosphate fertilizer purchasing cost
Wengfu's TCP facility comes on stream
Kailin Group prepares for high-end fertilizer market
India's purchasing power in relation to phosphate fertilizer continues to shrink
Market review of prime phosphate chemicals in Feb. 2013
International trade of phosphate chemicals in Jan. 2013
Price monitoring of some phosphate chemicals in Feb. 2013

Phosphorus Industry China Monthly Report, issued by CCM on 15th, keeps providing the latest company dynamics related to China’s phosphorus industry, and market analysis on supply and demand, import and export as well as global insight.

About CCM
CCM is dedicated to market research in China, Asia-Pacific Rim and global market. With a staff of more than 150 dedicated highly-educated professionals, CCM offers Market Data, Analysis, Reports, Newsletters, Buyer-Trader Information, Import/Export Analysis all through its new proprietary product ValoTracer.

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