Recent Reasons for Domestic Phosphate Fertilizer Price Increases in China

Rising Raw Material Costs

- The prices of sulfur and phosphate rock, key raw materials for phosphate fertilizers, have surged significantly. For example, sulfur prices at Yangtze River ports rose by 17.49% month-on-month in July 2024, while phosphate rock prices increased due to declining ore grades and stricter mining regulations .

- High energy costs (e.g., coal and natural gas) further elevated production expenses, compressing profit margins for manufacturers .

Supply-Demand Imbalance

- Tight Phosphate Rock Supply: Domestic phosphate rock production faces constraints from resource depletion, environmental policies, and safety standards. Despite a 42.16% year-on-year increase in imports in 2024, supply remains insufficient to meet demand .

-Seasonal Demand Surge: The spring ploughing season (Q1 2025) intensified demand for fertilizers, particularly high-phosphorus products, exacerbating market shortages .

International Market Influences

- The Russia-Ukraine conflict disrupted global fertilizer trade, pushing international prices to record highs. For instance, the price gap between Chinese domestic and international DAP (diammonium phosphate) reached 117% in 2022, incentivizing exports and reducing domestic availability .

Policy Adjustments and Export Dynamics

- China’s export restrictions (e.g., mandatory inspections) initially curbed phosphate fertilizer exports in 2022. However, streamlined procedures since 2024 accelerated exports, diverting supply away from the domestic market .

- Industry consolidation has favored large-scale, vertically integrated companies (e.g., BATIAN), which dominate production and stabilize costs through upstream resource control .

Emerging Competition from New Energy Sectors

- Rising demand for lithium iron phosphate (LFP) batteries has diverted phosphate resources, tightening availability for fertilizer production. High-purity phosphate products now prioritize industrial uses over agricultural needs .

?In summary, the price surge reflects a confluence of cost pressures, seasonal demand, export incentives, and structural shifts in phosphate resource allocation.