August 12, 2005

China calcium phosphate prices generally stable; significant price movements seen in September

An eFeedLink exclusive report

Ex-factory prices of calcium phosphate in China have risen significantly during the first twenty days of July, and remained stable at high levels in later part of July until recently.

Sichuan, a main calcium phosphate producing region, has been affected by the pig bacteria outbreak recently and prices there dipped at one stage. Overall calcium phosphate prices were expected to be generally stable to higher in the near term.

At producing regions, ex-factory offer prices of calcium phosphate from China's Zhengda Shiye company in Guizhou province registered RMB1900/tonne in recent days. Offer prices for Sichuan province's first grade quality brands, such as Little Prince, remained at RMB1,850/tonne.  Meanwhile, offer prices for Yunnan province's "Long" brand, and Sichuan's "Mianzhu" and "Jiannan" brands generally registered RMB1,800/tonne. Offer prices of some other lesser known producers registered above RMB1,750/tonne.

In consumption regions, transacted prices for north-eastern China's first and second grade quality brands of calcium phosphate averaged RMB2,150/tonne and RMB2,100/tonne respectively. (Those sold at Liaoning province were slightly cheaper, while those at Heilongjiang province were slightly more expensive due to high transportation costs.)  As different brands were available in northern China with purchase prices varied according to quantity, transacted prices there hovered between RMB2,000/tonne and RMB2,130/tonne. Meanwhile, transacted prices in eastern and southern Chinese regions averaged RMB2000-2,150/tonne and RMB1,950-2,050/tonne respectively.

Analysts expected calcium phosphate prices to move within a narrow range in the near term, due to a generally stable market demand-supply situation. Meanwhile, prices in August were expected to remain stable at high levels due to the following factors:

• Livestock production is generally doing well in recent days, and feed consumption remained stable, thus lending stability to demand for calcium phosphate. Some small and medium-sized feedmills have been increasing their purchase of calcium phosphate in recent days.
  
  
• In Sichuan province, tight outbound transportation which has affected prompt deliveries has resulted in buyers pressing for delivery of goods. Also, over-mining by calcium phosphate producers has resulted in a shortage of rock phosphates. These two factors have led to a critical supply situation in both production and consumption regions. As a result, second grade quality brands, such as "Shennong", have raised their ex-factory offer prices.
  
  
• The pig bacteria outbreak in Sichuan has affected live hog market in the region. While the situation has been brought under effective control in recent days, it would still take time for fears of pork consumption to diminish. However, analysts do not expect this to affect live hog markets nationwide, based on recent developments. 

Based on recent market situation, analysts expected calcium phosphate demand in China to remain active in the remaining part of August. The tight rock phosphate supply in Sichuan was not expected to ease in the near term. China's calcium phosphate prices would be generally stable with significant movements unlikely in August. However, significant price movements are expected to surface in September.

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