Thank you Yellowcake. Thumbs up.What MAK thread readers need to...

Thank you Yellowcake. Thumbs up.

What MAK thread readers need to take into account is that China is the World's largest Phosphate rock producer, producing 55mt out of 161mt of global production in 2010. Reminiscing history, Phosphate rock prices rose strongly during 2008 reaching around US$450 a tonne FOB Morocco in part due to direct consequence of an imposed export duty of 175% by the Chinese Government in August 2008 on DAP, MAP and urea to restrain exports and reduce domestic prices for Chinese farmers.

Interesting Points to note in today's fertiliser market:

1. China. The largest producer of Phosphate, with demand growth for the fertiliser at 18% in 2009. Yet, the potential need to import? i.e. same scenario to rice, rare earths, iron ore, etc.

2. China plans on restricting fertilizer exports by levying peak-season duties of 110 percent on urea and diammonium phosphate shipments starting Dec. 1. 2010. (Hence, partial to blame for increasing Phosphate prices)

3. India is one of the largest consumers of fertilizers, unable to cope with domestic demand. India meets a large part of its requirement of phosphate-based fertilisers by importing raw materials including rock phosphate and phosphoric acid.

4. China cuts cheap Phosphorous imports to India in January 2011.

5. Dig into the news, you will notice food inflation fears, and the beginning of riots in some parts of India as a result of higher wheat prices. Just a minor observation base on overseas travel and business experience, food prices going up in Australia say 10-20% will play a more substantial impact say in India and or China, where bread winners of the family take home less than a dollar a day.

These two world's most populous countries food production will keep on increasing to meet population growth. The question is how fast can supply catch up where supply is limited, where instability is threatening supplies?

Surely the strategic investment into MAK is in the Chinese and or Indian interest eyes. Why. Why would the largest producing country in the World be it China want to increase Phosphate import tariffs? Possibly because domestic demand could soon outpace supply of the World's largest Phosphate producer in their own country!!

All the best to all holders!

LM


References:
1. http://uk.ibtimes.com/articles/86615/20101129/potash-demand-rises-china-to-tax-phosphate-imports.htm
2. http://inchincloser.com/2011/01/31/a-confident-india-defies-low-cost-chinese-phosphorous-imports/
3. http://www.contextualise.com/articles/print/article/peak-phosphorus-in-sight-more-effective-use-will/
4. http://www.australianminesatlas.gov.au/aimr/commodity/phosphate_10.jsp