The China domestic diammonium phosphate (DAP) market closed June on a subdued note, with tepid trading activity as summer fertilizer demand tapered off and autumn procurement remained distant. Downstream buyers maintained only need-based purchases amid high market volatility, leading to delayed demand and cautious sentiment. The market outlook hinges largely on the timing of autumn fertilizer stocking.
1，Market Overview: Weak Demand and Cost Pressures
In June, China’s DAP market remained in a holding pattern. Raw material prices fluctuated, yet production costs stayed elevated. Early in the month, domestic demand was seasonally weak, keeping ex-factory prices stable (Hubei’s 64% DAP at 3,800-3,850 CNY/t), with producers focusing on export orders. Trading activity failed to pick up significantly, as summer fertilizer distribution reached grassroots levels, leaving dealers with limited restocking demand.
By mid-month, sulfur prices surged due to geopolitical tensions, squeezing margins further. Though urea’s rebound lifted market sentiment slightly, actual demand remained sluggish, with buyers sticking to cautious procurement.
In late June, supply increased as producers prioritized exports, while raw material prices softened, weakening cost support. With autumn preparations still premature, transactions slowed, sustaining a stagnant market.
2，Production Trends: Slight Rise in Output
According to Longzhong data, China’s DAP output reached 1.008 million tons in June (+0.56% MoM, -4.61% YoY), with operating rates at 53.50% (+2.98% MoM). The uptick stemmed from resumed production post-maintenance and steady export demand. In July, output may edge higher (capacity utilization ~55%) as firms fulfill international orders.
3，Market Sentiment: Stability Expected, but Risks Linger
A July sentiment survey revealed:
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80% expect stability, citing policy support (price stabilization), firm sulfur costs, and low inventory pressure.
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20% foresee declines, pointing to weak seasonal demand and easing cost support.
Domestic Outlook: The market will likely hold steady with minor adjustments, influenced by raw material trends. Autumn demand remains the key variable—if delayed further, downside risks could emerge.
International Divergence: While China’s market stagnates, global DAP prices stay firm due to tight supply and steady demand, creating a split market dynamic.
Key Factors to Watch in July:
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Autumn stocking pace – Will buyers step in early?
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Sulfur price movements – A rebound could renew cost pressure.
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Export performance – Sustained international orders may offset domestic weakness.
In summary, July’s DAP market may see limited upside unless autumn demand kicks in decisively. Producers navigating between export opportunities and domestic stagnation will need to stay agile.
