Now, we’ll discuss phosphate fertilizers—the second most heavily used fertilizer type after nitrogen fertilizers. Mosaic (MOS), which is one of the major phosphate fertilizer producers, provided some insights into the phosphate market during its earnings call.
Similar to the oversupply challenge faced by the nitrogen sector (MOO), the phosphate sector was also facing oversupply, which had a negative impact on fertilizer prices. In 2018, the supply tightened and the demand remained stable. In Mosaic’s earnings call, the company said, “What we’re seeing today is a relatively tight phosphate market with strong demand offsetting the gradual ramp-up of new supply.”
Supply cut from China
The supply and demand situation in China tightened, which would benefit phosphate players including Nutrien (NTR) and Israel Chemicals (ICL). The supply and demand should also impact phosphate exports from China. In the above chart, you can see that the overall phosphate exports from China have declined since 2015, especially DAP (diammonium phosphate). Among the different types of phosphate fertilizers, DAP is among the most applied by farmers.
While China’s exports declined, the global phosphate demand remained strong and gradually grew from the levels in 2015. The demand is expected to remain strong.