October 22, 2004

 

 

Buoyant Demand, High Raw Material & Transportation Costs Drove Prices of Calcium Phosphate Higher in China

 

An eFeedLink Exclusive Report
 

I     Prices Up by 85% Since March This Year

 

Prices of feed-grade calcium phosphate in China have been on the rise since July this year. In the first half of October, market prices of the feed additive in eastern China have reached RMB2,200/ton, while prices in the northern and northeastern regions have hit RMB2,300/ton, setting a six-year record high.

 

The ongoing market prices of calcium phosphate in China have risen by 85% compared with the year low of RMB1,200-1,300/ton, which was recorded in March this year. The sharp price increases have raised concerns among market participants.      

 

Market analysts attributed the significant price increases mainly to rising raw material and transportation costs.

 

Prices of raw materials used in calcium phosphate production, such as phosphate rocks, sulfuric acid, lime and anthracite, have been rising sharply since early this year. The higher raw material prices have been on the back of a generally strong pickup in the prices of industrial chemicals.

 

The difficulty in arranging delivery of calcium phosphate to regional markets has also contributed to the rising prices of the material.

     

II    Prices to Remain on Upward Trend in Near Term

 

Market participants are unsure whether the high prices of calcium phosphate in China can be sustained. Analysts generally agree that market demand for and supply of the material will determine its price movement in the months to come.

 

Some producers say the recent hike in calcium phosphate prices has resulted in lower sales volume. However, other producers have reported higher sales despite the higher prices. Meanwhile, producers who want to be sure that they can fulfill requirements are only accepting forward orders for one month in advance.

 

The market outlook for the hog industry in China has continued to remain positive since early this year, and the industry's demand for feed-grade calcium phosphate is expected to remain strong. Therefore, analysts expect the demand for the material to remain favorable in the near to medium term.

 

Premix feed producers in Guangdong have forecast that their feed sales would register a rise of 20%-30% in the October-November period. Additionally, the gradual recovery of China's poultry industry is also seen to stimulate the market demand for calcium phosphate.  Analysts say the prices of feed-grade calcium phosphate is expected to remain on an upward trend in the near term.