Fitch Ratings adjusts fertilizer price assumptions reflecting market dynamics
Dec 12, 2023
New Delhi [India], December 12 : Fitch Ratings has announced revisions to its fertilizer price assumptions for the years 2023-2025. These adjustments, influenced by year-to-date (YTD) prices, increased gas costs, and evolving supply-demand trends, aim to provide stakeholders with a comprehensive understanding of the fertilizers market.
Fitch Ratings has increased its ammonia price assumption for 2023, taking into account elevated YTD prices. The 2024-2025 assumptions consider higher gas prices, growing demand, particularly in 2024, and a dearth of capacity additions in 2025.
A projected 1.6 million tonnes (MT) increase in ammonia demand in 2024, as reported by CRU, aligns with the anticipation of new Gulf Coast capacity (1.3 MT) coming online in 1Q24.
The market is not expected to witness substantial additional merchant capacity in the coming years.
The commissioning of a new Baltic Sea terminal in 2H24 is projected to bring back approximately 2 MT of Russian exports, largely replacing exports via the Black Sea.
Fitch Ratings' revised urea price assumptions for 2023-2024 incorporate higher YTD prices and increased gas price expectations.
While the market exhibits ample supply, Russia's capacity additions, initially anticipated in earlier timelines, are now expected in 4Q24.
India's enhanced self-sufficiency and increased Chinese exports post the removal of restrictions contribute to sustained demand, fueled by relatively low prices compared to other nitrogen-based fertilizers.
The increased 2023 phosphate rock price assumption is a response to YTD prices. A shift in phosphate rock supply, triggered by reduced exports from Morocco, has been filled by additional exports from the Middle East.
Russia's exports remain low, and substantial global capacity additions are not anticipated in 2024, according to CRU.
While significant capacity increases are foreseen in China in 2025 and Saudi Arabia in 2027, phosphate rock demand is expected to recover in 2024, with demand growth outpacing supply through 2027.
The revised Diammonium Phosphate (DAP) assumption for 2024 is influenced by supply restrictions.
Despite increased exports from Morocco, the imposition of new export restrictions by China in 4Q23 has maintained tight supply conditions in the market. Demand is anticipated to receive support from the upcoming spring planting season in the United States.
All assumptions for potash remain unchanged. The recovery of potash exports from Russia and Belarus, although below historical levels, coupled with strong demand, notably from imports to China, contribute to the stability of these assumptions.
Fitch Ratings' adjustments aim to offer a nuanced view of the fertilizer market, allowing stakeholders to navigate this landscape with informed perspectives.
