In 2023, the domestic prices of phosphate rock in China did not replicate the unilateral upward trend of 2022, with prices for various grades of phosphate rock undergoing oscillatory adjustments. Similar to the situation in 2022, the domestic market supply of phosphate rock continued to decrease in 2023, while downstream demand kept growing. Looking into 2024, this situation is expected to continue further, with prices still maintaining a high level of volatility.
Domestic Phosphate Rock Prices Experience Oscillations, with Both Increases and Decreases in Supply and Demand
a. Phosphate Rock Prices Saw Both Rises and Falls in 2023
Throughout 2023, domestic phosphate rock market prices showed a trend of rising first and then falling. Taking the price of phosphate rock with a phosphorus content of 28% in the Guizhou region as an example, the price at the end of December 2023 was 830 yuan/ton, down 130 yuan/ton from the price of 960 yuan/ton at the beginning of January, a decrease of 13.54%. The lowest price for the year was 730 yuan/ton, up 15.87% year-over-year; the highest price was 1080 yuan/ton, up 4.85% year-over-year; and the average price for the year was 898 yuan/ton, up 3.57% year-over-year.
From the price trend perspective, the domestic phosphate rock prices in 2023 went through two cycles of rises and falls, totaling four stages. The first stage, from the beginning of January to the end of March, saw a gradual warming of downstream phosphate fertilizer market demand as rural areas in the north and south of China began spring plowing, starting a modest uptrend in phosphate rock prices. The second stage, from the end of March to early August, witnessed a gradual decrease in downstream demand as the peak season passed, leading to step-by-step price reductions and bottom exploration. The third stage, from early August to after the National Day holiday, saw phosphate rock prices stabilize and slightly rebound. The fourth stage, from after the National Day holiday to the end of the year, experienced another downturn. Overall, the trend of phosphate rock prices in 2023 was a necessary adjustment after the significant price increase in 2022.
b. Domestic Phosphate Rock Production Continues to Decline
According to data, in December 2023, the national production of phosphate rock (converted to 30% P2O5) was 10.223 million tons, a month-on-month increase of 2.59%, and a year-on-year decrease of 8.99%. The total national phosphate rock production for the year was 103.108 million tons, a year-on-year decrease of 0.45%. Annual production has shown a downward trend for three consecutive years.
c. Domestic Phosphate Rock Consumption Continues to Rise
According to data, in December 2023, the national apparent consumption of phosphate rock (converted to 30% P2O5) was 10.4135 million tons, a year-on-year decrease of 3.25%. The total national apparent consumption of phosphate rock for the year was 104.0273 million tons, a year-on-year increase of 3.7%. Annual consumption has maintained growth for four consecutive years.
d. Sharp Decrease in Phosphate Rock Exports and Steep Increase in Imports in 2023
According to customs data, in December 2023, China’s phosphate rock export volume was 6607 tons, a year-on-year increase of 0.25%. The total export volume for the year was 314,300 tons, a significant decrease of 42.72%. In December 2023, China’s phosphate rock import volume was 205,200 tons, a year-on-year increase of 54.32%. The total import volume for the year was 1.2336 million tons, a significant increase of 3765%. The surge in imports in 2023 was due to the concentrated commissioning of domestic lithium iron phosphate production capacity, with this demand of approximately one million tons only being met through imports.
The significant increase in imports in 2023 is only a specific case, indicating the situation in 2023, and does not imply such a massive growth every year in the future.
2024 Phosphate Rock Market Outlook
Prices for domestic phosphate rock are expected to continue to oscillate in 2024. On one hand, from the supply side, whether from the national level or provincial and municipal local governments, environmental protection requirements for phosphate industry enterprises will only become stricter, as has been very evident in the past few years. Companies holding ore will continue to be reluctant to sell, and the grade of domestic phosphate rock tends to decline. As of now, there is no significant new capacity coming online in 2024, so the tight supply of phosphate rock will continue. The fact that domestic phosphate rock production was lower than apparent consumption for two consecutive years in 2022-2023 is very telling. On the other hand, from the demand side, there will not be significant changes in downstream phosphate fertilizer industry demand. However, with the rapid growth of new energy vehicle production and sales, given the increasing use of lithium iron phosphate batteries in the power battery field, it is expected that the demand for phosphate rock will likely maintain a strong growth trend, with some institutions predicting this demand will reach 3.3 million tons. These two factors will drive phosphate rock prices to continue oscillating at high levels in 2024.
Looking at a longer-term phase, the trend of the domestic phosphate rock market entering a bull market is already very clear. On the supply side, it is expected that from 2024 to 2030, China’s phosphate rock production “ceiling” will be about 100 million tons. Considering the pressure of environmental protection policies and the reality of declining ore grades, production can only decrease without any increase. On the demand side, the demand for phosphate rock will only increase without any decrease, and it is only a matter of time before consumption exceeds 110 million tons. Supply will increasingly struggle to meet demand, export volumes will gradually shrink, and import volumes will correspondingly increase, with China’s dependence on foreign phosphate rock steadily climbing.
[Source – 上海有色网] 在磷酸铁锂需求加持下 2024年磷矿石市场如何演绎？ https://news.smm.cn/news/102633762
