Supply and demand for phosphate rock and phosacid in 2012 Q1

Global supply of phosphates has been more than sufficient to satisfy demand during the quarter, due to massive Chinese exports during the second half of 2011, and improved utilization rates at the new Maaden plant in Saudi Arabia. DAP prices dropped from around USD 550 per ton fob US Gulf at the start of the quarter to end the quarter at USD 500 per ton, and several key producers curtailed production as a result. However, demand improved during the quarter, paving the way for higher utilization rates going into the second quarter. Phosphoric acid and phosphate rock prices have been adjusted down as a consequence of lower DAP prices, but decreasing proportionally less than DAP. Average upgrading margins from rock to DAP were almost halved compared with first quarter 2011, and all the remaining value is now in the upgrading from phosphate rock to phosphoric acid. Although phosphate prices have declined since the third quarter of 2011, the average first quarter phosphate rock price fob Morocco exceeded same quarter last year by 25%.