China’s Fertilizer Export Cuts Squeeze Global Supply

Summary

China's decision to cut back on fertilizer exports, particularly phosphate and urea, has created ripples in the global supply chain. Historically a major exporter, China has shifted focus to bolster its domestic agriculture, leaving dependent countries scrambling for supplies. This shift has led to increased prices and tighter markets worldwide. With key countries controlling the phosphate market and China's ongoing export reductions, the global market faces volatility and uncertainty as stakeholders seek alternative sources and strategies.

Highlights

• Chinese fertilizer export reductions continue, impacting global supply. 📉
• China's phosphate exports plummet to record lows, affecting global markets. 🌍
• Strategic shift to support Chinese local farming exacerbates global shortages. 🇨🇳
• Export cuts have led to increased prices and volatility in global markets. 🏷️
• China, a key player, causes ripple effects across the world with its export policy. 🌐
• UAN shortages in the US drive farmers to alternative options like urea. 🌾
• Urea prices surge as farmers adapt to limited UAN supply, seeking cost-effective options. 💸
• Logistical challenges mean import relief is delayed, prolonging market strain. ⏳

Key Takeaways

• China's fertilizer export cuts, focusing on phosphate and urea, strain global supplies. 🌎
• Chinese phosphate exports have dropped drastically, hitting an all-time low in early 2025. 📉
• China's strategic domestic focus aims to support local agriculture and industry. 🇨🇳
• Dependent countries face challenges due to restricted Chinese exports, pushing global prices up. 📈
• Global fertilizer market volatility is heightened by limited production sources and China's pullback. 🤯
• US nitrogen market faces issues with UAN supplies, pushing farmers to alternative fertilizers. 🌿
• Urea prices rise as farmers look for the cheapest nitrogen alternatives available. 💰
• Transport and logistics complications mean immediate relief from imports is unlikely. 🚢

Overview

China's fertilizer export reduction has been a hot topic, especially with its historical role as a leading exporter. The country's recent focus on sustaining local agriculture has led to significant cutbacks in global phosphate and urea exports. This unexpected move caught many dependent countries off guard, sparking concerns over supply shortages and escalating prices. With such a tight control over phosphate production, international markets are experiencing a whirlwind of volatility and unpredictability.

The global impact of China's strategic domestic focus can't be overstated. As China draws back its exports to prioritize its own agricultural needs, dependent nations are left hunting for new suppliers. This shift not only affects immediate availability but also pushes prices upwards. Notably, this has created a bullish market environment, with price floors being driven ever higher, complicating planning and purchase strategies for international buyers.

In the US, the ripple effects are palpable, with significant strain on nitrogen markets and a noticeable shortage in UAN supplies. As farmers pivot to alternatives like urea, they face rising prices and logistical nightmares. Transporting imports from regions like the Middle East is inherently slow, delaying potential relief and prolonging market pressures. Despite these challenges, stakeholders are being urged to rethink their strategies and prepare for continued upheaval in the fertilizer landscape.

Chapters

• 00:00 - 00:30: Introduction and Overview This chapter discusses the significant reduction in Chinese fertilizer exports during the spring, particularly in phosphate and urea shipments. Despite previously dominating the global supply, China's export volumes have decreased significantly from historical levels, leading to uncertainty in the global market. Concurrently, the US nitrogen markets remain stable with consistent Thai UAN supplies and increasing urea prices.
• 00:30 - 02:00: Interview Introduction and Discussion on Phosphate Exports The chapter features an interview introduction with Stone X's vice president of fertilizer, Josh Lynville, conducted by Johanna Bota. The discussion focuses on phosphate exports from China. Historically, China has been a leading producer and exporter of phosphate. The conversation aims to analyze current statistics and projections to determine whether China's phosphate exports are expected to return to their usual levels.
• 02:00 - 03:30: China's Phosphate Export Strategy and Global Impact The chapter discusses China's strategy regarding phosphate exports, highlighting significant changes since 2021. In that year, China's phosphate exports reached around 10 million tons. However, in subsequent years, exports have been reduced by several million tons annually. The Chinese government, in response to high global prices and tight supplies, decided to retain more phosphate domestically. This decision was made to strengthen internal supplies and maintain lower domestic prices compared to international levels. The strategy has been beneficial for Chinese farmers, as it supports local supply and pricing.
• 03:30 - 05:30: Situation in 2025 and China’s Export Restrictions The chapter titled 'Situation in 2025 and China’s Export Restrictions' discusses the impact of China's export restrictions on global trade. By the first quarter of 2025, China's exports have significantly decreased, reaching an all-time low. The chapter compares export figures from early 2022 and 2025, highlighting a drastic reduction from 950,000 tons in the first quarter of 2022 to just 111,000 tons in 2025, with only 13,000 tons exported in March 2025. This decline reflects the continuing effectiveness of China's restrictive export policies.
• 05:30 - 07:30: Impact on Global Markets and Producers’ Response The chapter discusses the government's strategy to become more self-sufficient with phosphate supplies. This strategic shift is influenced by the desire to isolate from global dependencies, particularly in preparation for possible challenges related to China. The government prioritizes securing its own phosphate resources over supplying these resources to the rest of the world.
• 07:30 - 09:30: Discussion on Chinese Urea Exports and Supply Situation The chapter discusses the significant changes affecting Chinese urea exports and the supply situation. It highlights several factors, including stricter environmental standards and increased demand from farmers, as well as rising requirements for phosphate imports due to battery production. There are concerns about potential production issues within China. The focus, however, remains on the actual export numbers, which are not expected to improve significantly in the second quarter. The situation remains dynamic, as changes can occur rapidly, especially in China.
• 09:30 - 10:30: US Nitrogen Market and Farmers' Adjustments The chapter discusses the potential impacts on the US nitrogen market and farmers' adjustments due to low supplies of DAP (diammonium phosphate) and MAP (monoammonium phosphate) expected in the first half of 2025. Export restrictions and low phosphate exports from China are critical factors contributing to these low supplies. The discussion speculates that even if export restrictions are lifted, supplies may remain limited, affecting global markets and countries dependent on these fertilizers.
• 10:30 - 11:30: Urea Prices and Import Challenges This chapter discusses the challenges in global urea prices and imports, focusing on the concentration of phosphate production. Five countries—Morocco, Russia, China, the U.S., and Saudi Arabia—dominate the production and export of phosphate, controlling 85-90% of the global supply. A significant reduction in production by China, historically the largest producer, leads to increased uncertainty and bullish events in global markets as other countries scramble to find alternative sources.
• 11:30 - 15:00: Conclusion and Closing Remarks The chapter discusses the current situation of product production around the world. There is a significant deficit in production capacity globally, and producers in various regions are looking for ways to capitalize on this opportunity. The timing is somewhat favorable as the northern hemisphere is entering the late spring and summer period, leading to a seasonal dip in demand and historically low prices. The chapter concludes with a hopeful note that this downturn might provide time for market correction.

China’s Fertilizer Export Cuts Squeeze Global Supply Transcription

• 00:00 - 00:30 [Music] chinese fertilizer exports remain notably quiet this spring with march data confirming a continued slowdown in both phosphate and ura shipments once a dominant force in global supply china's current volumes are well below historical norms adding uncertainty to the global market at the same time us nitrogen markets are holding firm with thai uan supplies and rising ura prices
• 00:30 - 01:00 putting pressure on buyers as the season moves forward i'm johannabota and with us today is stone x's vice president of fertilizer josh lynville josh lovely having you here with us today long time no talk good to see you again so let's start with phosphate experts coming from china now historically china has been one of the largest producers and exporters of phosphate walk me through what the numbers are saying and also do you expect them to return to normal
• 01:00 - 01:30 anytime soon so the last normal year that we saw from china in terms of phosphate exports would have been 2021 their exports hit about 10 million tons now since that time they've drawn back significantly a few million ton every single year the government during that period with global high prices tight supplies effectively said "we're a net exporter why don't we keep these tons home it buoys our own supplies and it keeps our domestic price low versus the rest of the world." fortunately for chinese farmers this program has worked
• 01:30 - 02:00 out extremely well it's checked both of the boxes unfortunately for the rest of the world that program has worked very well and we continue to see that happen to the point that we've hit an all-time low here in the first quarter of 2025 so what has been that number well i actually pulled up the numbers before you and i jumped on here i did a little calculation in 2021 january february march i'm sorry january february march of 2022 they exported 950,000 tons january february march of this year 111,000 tons march only 13,000
• 02:00 - 02:30 tons so why do you think that is happening why is the government doing this what's their strategy well you can go really broad level on a lot of those discussions you can start to talk a little bit about isolationalists you know trying to be a little more self-sufficient you know preparing for whatever may come from china but ultimately i think it just comes down to they've sat there and said rather than trying to feed the rest of the world with phosphate supplies we're going to make sure that we have our own and of
• 02:30 - 03:00 course there's a massive change in you know environmental standards and you know you see a lot of demand from the farmers going up but you do see a lot more battery production requiring phosphate imports we think we're losing some to them there could be some production issues within the country we don't see so i i think it's a multitude of reasons but unfortunately at the end of the day the only thing that really matters are those actual numbers that are being exported and from what we are hearing for the second quarter it doesn't look like it's going to get significantly better that can change it can obvious it's china as soon as you
• 03:00 - 03:30 say they can't do something they will turn around and shock you but right now the indications are that even if those export restrictions are released april may june they may not have the dap map supplies to export so numbers could stay very very low in the first half of 2025 very meager supplies being allowed and if china's phosphate exports remain low uh throughout 2025 how is that going to impact global markets especially uh for dependent countries on dap and map it
• 03:30 - 04:00 it's going to be an incredibly bullish event and this is the unfortunate part of it when you look at phosphate there's really only five countries around the the world that have phosphate in big ways that's morocco russia china the us and saudi arabia those five countries controls something around 85 to 90% of global production and exports so when one of those parties china being the largest on a historical standpoint starts to scale back at this kind of a level the rest of the world sits there and looks around and says "where am i
• 04:00 - 04:30 going to find my product from?" we simply don't have the excess production around the world to take care of that kind of a differential so how can producers in other regions then seize this opportunity well it's unfortunately a situation where the the fortunate part of it is the time of year we are kind of moving into that seasonal low the northern hemisphere is moving into the late spring summer period so demand really starts to dip and that's when we see the annual low price historically speaking so we've got a little bit of time hoping this whole thing will start to correct
• 04:30 - 05:00 unfortunately there's not really much we can do except have conversations with our retailers with our suppliers how are you sitting do you have supply what are your thoughts for next year um i know here around kansas city a lot of our farmers like to put on phosphate and potachsh in the fall season and historically that's what we do we can have that out of the way and spring is just focus on planting in spring this may be the year we need to consider changing our patterns okay let's move now to chinese ura exports it's been
• 05:00 - 05:30 kind of similar to what's happening with phosphate so can you give me some numbers um so typically speaking china on the ura side exports something between 5 to 5 and a half million ton they approximately 10% of the global export marketplace um here so far this fertilizer year i think we're up to maybe a few 10,000 significantly less exports again the same thing ura is seen more as an energy style product and they have really clamped down now we have heard that domestic chinese stockpiles are
• 05:30 - 06:00 extremely high operating rates of production plants have been extremely high but they are refusing to allow those exports to go so again as long as they are not in that export realm the world is very very tight on supply side of the equation well then so how will supply chain and pricing change because of this outcome that is helping they alongside european production remain about 75% of uh normal operating rates based on high natural gas cost because
• 06:00 - 06:30 of those two instances you're going to continue to see volatility in that market market it a high supply situation does not mean prices cannot go lower but what it does is it raises that price floor there is an absolute floor in every market and today with both of those uh parties kind of non-existent that price floor is significantly higher than it would be otherwise and last but not least let's switch over to the us nitrogen market specifically uan supplies now they remain extremely hard to find how are growers adjusting to it
• 06:30 - 07:00 this spring yeah this is something we talked about last week and it continues today uh last couple weeks we've been hearing retailers say you know it's going to be late may before i can find any substantial volume uh late last week this week now people are saying late may tons are gone it's now june and unfortunately we don't think this situation is going to change itself significantly uh for the rest of the spring season the way you're seeing the market start to kind of react to this is where the farmer is able to they're
• 07:00 - 07:30 switching from liquid uan fertilizer to dry ura fertilizer uh you have seen ura move to a decent discount versus uan on a price per pound of end so farmers are going to chase the cheapest nitrogen input they possibly can and those that are being told i'm sorry i can't find you tons until june well i've got a crop i've got a plant that means i got to put fertilizer on i need nitrogen get me whatever nitrogen style you can and that's been helping prop up the uh the us north america marketplace yeah because i see that ura prices are
• 07:30 - 08:00 climbing fast i mean i have here on my notes that april nola ura barges are up $20 from early last week so do you see any short-term relief coming either from other imports or like you said alternative sources unfortunately when you start to look at exports our calendar is almost closed uh when you think about how long it takes to move vessels around the world it does seem like it moves very rapidly but this time of year it's not fast enough uh it takes nearly a month to move a vessel from the middle east where half of our
• 08:00 - 08:30 urine imports come from to arrive to us shores and that doesn't do farmers very much good you've got to move it from the shores now inland and put it in the warehouse that can be another two three four week process itself so if we were to come together right now and say "hey we're going to go buy a vessel ura." that thing is not showing up until second half may and it likely isn't available to the farmer until june and for most farmers that's simply too late so what we have is kind of what we have all right josh thank you so much and thank you for watching for more
• 08:30 - 09:00 financial content like this please like and subscribe to our channel see you then [Music]