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Post-4Q16 Dirt: Your Operating Results for 8 Fertilizer Producers

PART:
1 2 3 4 5 6 7 8 9 10 11
Part 10
Post-4Q16 Dirt: Your Operating Results for 8 Fertilizer Producers PART 10 OF 11

Phosphate on the Barrel: The Latest Prices for Major Producers

Ammonium phosphates

Ammonium phosphates are the most widely used phosphate fertilizers in the world. DAP (diammonium phosphate) is the most used among phosphate fertilizers, according to Mosaic Company (MOS), which is one of the largest producers (MXI) of phosphate fertilizers.

Over the past few quarters, DAP prices have also started on a downward trend, similar to nitrogen and potash fertilizers, which we discussed in previous parts of this series. Below, we’ll discuss how DAP prices have performed in 4Q16 for some of the largest producers.

Phosphate on the Barrel: The Latest Prices for Major Producers

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Average realized prices

Average realized phosphate prices fell 22% for the above three companies YoY (year-over-year) in 4Q16. The average realized prices for DAP were the lowest for Mosaic during the quarter. In 4Q16, Mosaic’s average selling price for potash fell 22% to $317 per metric ton, as compared to $410 per metric ton in 4Q15.

Agrium’s (AGU) average realized phosphate prices also fell ~22% YoY to $475 per metric ton from $610 per metric ton in 4Q15. PotashCorp (POT) average realized prices fell 29% YoY to $328 per metric ton from $461 per metric ton.

Why prices fell

Reasons highlighted in the previous quarter’s earnings call continued to cast a shadow on phosphate prices in 4Q16. According to PotashCorp, phosphate prices fell as a result of weakness in demand and lower raw material costs on a YoY basis.

According to Mosaic, an increase in availability from competition as well as softer demand from Indian customers put downward pressure on phosphate fertilizer prices during the quarter. Israel Chemicals (ICL) echoed similar reasons for weakness in phosphate prices.

Next, let’s discuss the phosphate segment’s gross margins.

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