Fitch Ratings announced on June 18 that it has increased its 2024 assumption for phosphate rock on stronger year-to-date pricing and its 2024/25 assumptions for DAP due to China’s continued export restrictions that support market prices.
The firm cut its 2024 assumption for potash due to a faster-than-expected supply recovery, while other fertilizer price assumptions remained unchanged.
Though year-to-date pricing is higher, Fitch said it expects phosphate rock prices to decline in the second half of 2024 as availability improves with increased exports from Morocco and continued high exports from Jordan and Egypt. Global capacity additions will be limited in 2024, Fitch said, but new supply will come online in China in 2025 and in Saudi Arabia in 2027. Demand will grow by 2.5% in 2024, Fitch projected, supported by higher availability and affordability.
Fitch said Morocco increased DAP exports in 1Q 2024, supporting expectations of higher exports for the whole year, while Saudi Arabia will gradually ramp up its exports by 2028. Fitch said DAP demand will grow steadily by 1.3% in 2024 in all global markets except China, with medium-term demand growth limited by availability.
Fitch’s lower 2024 assumption for potash reflects a faster-than-expected rebound of supply from Russia and Belarus, the firm said. While Nutrien has indefinitely postponed plans to reactivate idled capacity and Mosaic announced the curtailment of its Colonsay mine, Fitch said the market should remain well-supplied in 2024 due to inventory levels in Brazil and China.
“The unchanged ammonia assumptions reflect our view that prices are likely to reduce from the current levels as new capacity of 1.3 million mt on the Gulf Coast comes online in 3Q 2024 and Russian exports via the Black Sea will gradually return,” the company said. “Demand is supported by improved affordability and availability.”
Fitch said it believes the urea market will remain well-supplied despite the lack of exports from China, with Russia continuing to play a significant role in export markets despite delays in capacity additions. The company said it expects “modest global capacity expansion until 2027,” while 2024 demand growth in Latin America and southeast Asia will compensate for lower imports to India.