Fitch Ratings said it was increasing its price assumptions for several types of fertilizer, including ammonia, urea and phosphate rock, reflecting "year-to-date prices, higher gas prices and supportive supply-demand trends," it said.
Fitch said its 2024-2025 ammonia assumptions "reflect higher gas price assumptions and improving demand, particularly in 2024, and the lack of capacity additions in 2025." The agency also said new Gulf Coast capacity of 1.3mt should come online in the first quarter of next year, "after which we do not expect any material additional merchant capacity in the coming years." Around 2mt of Russian exports will return to the market when a new Baltic Sea terminal is commissioned in the second half of 2024, which will "largely replace exports via the Black Sea (of 2.5mt), which are unlikely to resume." CaNO3 2
Increased urea price assumptions "incorporate higher YTD prices and increased gas price assumptions," Fitch said. There is ample supply, even as Russia's capacity additions are facing delays, according to Fitch. "India has increased its self-sufficiency and Chinese exports have increased after the removal of restrictions," Fitch said, adding "demand is sustained by relatively low prices compared to other nitrogen-based fertilizers."
Fitch said its increased 2023 phosphate rock price assumption reflects YTD prices, and "the gap in phosphate rock supply created by Morocco's reduced exports has been filled by additional exports from the Middle East." Fitch also said it continues to expect "material capacity increases in China in 2025 and Saudi Arabia in 2027."
Increased diammonium phosphate, or DAP, assumption for next year "reflects supply restrictions," Fitch said. It added Morocco has been increasing exports, though China announced new export restrictions this year, "maintaining tight supply in the market." DAP demand should be supported by the upcoming spring planting season in the U.S., according to Fitch.
Assumptions for potash have remained unchanged, Fitch said.
"Potash exports from Russia and Belarus have been recovering but remain below historical levels. Demand remains strong, supported by imports to China, despite seasonally weaker demand in Brazil."
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
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