DAP market estimated to remain strong in 2021
Release_time:2021-01-13 09:31:15 Source:original

In late December, the price of sulfur at ports rose to 940 yuan/t and the ex-factory price of synthetic ammonia in Southwest China exceeded 4,000 yuan/t compared to 3,000 yuan/t before the limited natural gas supply policy was implemented, some DAP enterprises raised their price quotes again. Some analysts wonder if it is good time for distributors to stock up DAP for 2021.

First, DAP enterprises are determined to firm up prices as their manufacturing costs increase and the supply is relatively tight. As of early January, the shipments of DAP to domestic buyers were still low due to good DAP exports this year. Most large DAP enterprises have plenty of orders awaiting delivery, and some small enterprises will be kept busy until March, therefore the supply of DAP is relatively tight now. Moreover, the manufacturing costs of DAP enterprises increased about 300 yuan/t compared to earlier times.

Second, DAP market in China is currently in a stalemate as distributors are reluctant to purchase DAP at such high prices. For example, the price of 64% DAP to Heilongjiang province (including shipment cost) reached 2,850 yuan/t, so distributors were at high risk to engage in winter reserves. Moreover, they cannot get spot goods even if they place orders.

Finally, driven by the booming exports, DAP market in China has been generally strong in 2020.  Some major buyers such as India and Pakistan slowed their pace in DAP purchase in Q4 2020, so they may have strong demand in this spring as their inventory is lower than the same period last year. This will be conducive to the domestic DAP market.

In conclusion, China’s DAP market is estimated to remain strong in 2021. Distributors and other relevant stakeholders shall pay close attention to the international demand and domestic supply situation.