CRU: Phosphate Rock Margins Squeezed as Tighter EU Regulation Looms

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.

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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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CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.

Since our foundation in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China. CRU employs over 250 experts and has more than 10 offices around the world, in Europe, the Americas, China, Asia and Australia - our office in Beijing opened in 2004.

When facing critical business decisions, you can rely on this first-hand knowledge to give you a complete view on a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.

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SOURCE CRU