LONDON, October 12, 2017 /PRNewswire/ --
As overcapacity in the phosphate rock market drags prices lower and pressures producer margins, impending regulatory changes in the EU could shift industry dynamics, cost structure and trade flows.
In the recently published 2017 edition of CRU's Phosphate Rock Cost Service, our analysis shows that lower prices have squeezed margins significantly despite global average site costs declining 12% since 2014. Changes in market dynamics, triggered by regulatory changes, provide both opportunities and challenges for phosphate rock producers across the cost curve.
Sliding prices pressure producer margins
Traded phosphate rock prices have declined sharply over the past year, following a period of relative stability. This has been triggered by overcapacity, particularly with OCP (Morocco) ramping up new rock capacity in-line with expansions at downstream facilities. Although global average site costs have declined 12% since 2014, lower prices have severely pressured producer margins. Suppliers of low quality rock, like those in Egypt, are operating on thin margins while some phosphate rock projects, like Kropz in South Africa, have delayed commissioning, in-part due to difficult market conditions.
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