Phosphate Rock: 10 Year Outlook 2008/9

CRU Group,

British Sulphur Consultants, A division of CRU

Resource ID: 


In January 2008 the main phosphate rock producers continued an aggressive push for higher rock prices. Along with a rapid run-up in sulphur raw material, as well as overall production costs (including energy, as well as ammonia for downstream product production), and coupled with very strong global demand, phosphate prices surged to record highs through the first half of 2008. With the global economic crisis in Q3-4 of 2008 attacking the fundamentals of the financial industry, the commodities markets and other industries have followed suit, as grain prices, shipping rates and sulphur costs are all on a steep decline. We believe, however, that the fundamentals of the phosphate rock market are relatively sound. "This does not mean that rock prices are not expected to fall, but that we believe that the fall will be relatively slow, and the bottom will be significantly higher than previous troughs. True with all commodities, phosphate rock prices are cyclical, running about 7-10 years from peak-to-peak or trough-to-trough of the cycle. Historically, phosphate rock has shown a high level of price elasticity of demand, which we are now starting to see with rock demand destruction brought on by high phosphate rock prices cutting demand by non-integrated processors while high fertilizer prices cut into demand for finished products by all rock processors." (Extract from the Phosphate Rock 10 Year Outlook 2008/9 report.)