According to China Chemical News, on December 11, the National Development and Reform Commission convened a special meeting with key phosphate fertilizer producers and distributors nationwide. The meeting explicitly stated that orderly exports of phosphate fertilizers would be suspended in principle until August 2026, aiming to concentrate resources on securing domestic supply and stabilizing market prices. This move has drawn intense industry attention amid the current market conditions of high prices and tight supply. What's the rationale behind this regulation?

Soaring Phosphate Fertilizer Prices: Multiple Factors at Play

Domestic phosphate fertilizer prices have remained persistently high this year. Data shows that the average market price for 55% granular monoammonium phosphate reached approximately 3,600 yuan per ton in May 2025, marking a 30% increase. and diammonium phosphate (DAP) was quoted at around 4,100 yuan per ton in December, representing a 28% increase.

Industry analysts note that the price surge is not coincidental but stems from a convergence of factors including resource constraints, rising costs, and robust demand:

First, constraints on phosphate ore resources and diversion to new energy demands.

China holds only 5% of global phosphate reserves but has long accounted for over 40% of production, with a reserve-to-production ratio of just 34—far below the global average of 308 (Source: China Ministry of Natural Resources statistics). To protect resources and ecosystems, annual phosphate mining has been strictly capped at 150 million tons since 2016, with the quota tightening further to 140 million tons by 2025. Concurrently, the rapid expansion of the new energy sector—where each ton of lithium iron phosphate consumes approximately 3.5 tons of phosphate rock—is projected to drive an additional 4.4 million tons of phosphate demand in energy storage alone by 2025, accounting for over 4% of China's total phosphate output (Source: China Phosphate Fertilizer Industry Association). This growing demand for phosphate resources intensifies supply constraints for phosphate rock used in fertilizer production.

Second, soaring sulfur prices have become a key driver.

Customs data shows China imported 11.93 million tons of sulfur in 2024, with an external dependency rate reaching 61%. Sulfur accounts for 30%–40% of phosphate fertilizer production costs. International sulfur prices have also surged sharply. According to the IFA Weekly Report, December sulfur contract prices in Qatar and Kuwait have climbed to $495 per ton FOB, marking a 230% increase year-to-date. Domestic sulfur prices have soared significantly, breaking through the 10-year high. Data shows that the mainstream granular sulfur price at Zhenjiang Port has risen above 4,000 yuan, with a cumulative increase exceeding 163% year-to-date. The surge in sulfur prices has directly driven up production costs for phosphate fertilizers.

Third, exports have seen “reduced volume but high prices.”

According to General Administration of Customs data, from January to September 2025, China's cumulative exports of monoammonium phosphate totaled 1.249 million tons, down 20.5% from 1.571 million tons in the same period last year. and diammonium phosphate exports totaled 2.514 million tons, down 23.6% from 3.29 million tons in the same period last year. Despite the substantial decline in phosphate fertilizer exports, international prices remain significantly higher than domestic ones. As of August 2025, overseas MAP and DAP prices were 56.6% and 44.6% higher than domestic prices, respectively.

Fourth, industry consolidation and environmental production restrictions further constrained supply.

As phosphate ore resources concentrated among leading enterprises, companies like Yuntianhua and Chuanheng reduced external sales of phosphate ore to prioritize their own deep processing needs. This led to production halts at some small and medium-sized phosphate fertilizer enterprises due to raw material shortages. Simultaneously, heightened environmental requirements and the phasing out of inefficient capacity (projected to eliminate 36-46 million tons cumulatively over the next 3-4 years) further limited supply flexibility.

Export Suspension: Emergency Logic for Supply Assurance and Price Stability

The National Development and Reform Commission's (NDRC) suspension of orderly phosphate fertilizer exports until August 2026 is fundamentally an emergency measure grounded in national food security strategy. With the 2026 spring planting season approaching, ensuring sufficient and stable agricultural fertilizer supplies has become an urgent priority. This regulatory action conveys the following policy implications:

First, securing phosphate fertilizer supply and stabilizing prices safeguards food security.

Amid tight domestic supply and high prices, suspending exports swiftly reduces resource diversion, increasing domestic market availability. This aligns with the NDRC's early 2025 directive to “urge fertilizer producers and distributors to prioritize domestic supply,” reflecting the state's balancing act between food security and industry economic interests.

Second, it intervenes in market failures to ease supply-demand tensions.

Data indicates that by early December, sulfur port inventories reached 2.2028 million tons, yet prices continued to climb, reflecting deep market concerns over future supply. Under these circumstances, relying solely on market regulation proves insufficient to swiftly resolve supply-demand imbalances, making administrative measures a necessary supplement.

While the export suspension is an emergency measure, it provides a buffer period for industry restructuring, establishing resource security systems, and refining price control mechanisms.

Long-Term Balance: Finding the Optimal Solution Between Food Security, Industry Development, and Corporate Profitability

Suspending exports is merely a temporary measure to alleviate current tensions. Achieving lasting stability in the phosphate fertilizer industry requires finding a sustainable balance among food security, industry development, and corporate profitability. This necessitates comprehensive efforts across four dimensions: resource security, industrial structure, cost control, and policy coordination:

First, establish resource security by building a dual-track system of “domestic intensification + overseas supplementation.”

Domestically, strictly enforce total control over phosphate mining, optimize quota allocation, and prioritize enterprises with high resource utilization efficiency and strong phosphate fertilizer supply capabilities. Simultaneously, support technological breakthroughs in low-grade phosphate ore beneficiation to enhance resource recovery rates. Overseas, encourage enterprises to participate in global phosphate resource development through equity investments and long-term procurement agreements, broaden sulfur import channels, and promote resource diversification.

Second, optimize the industrial structure to promote orderly synergy between “agricultural security and new energy expansion.”

A clear red line for phosphate fertilizer production capacity should be established to ensure uninterrupted basic agricultural fertilizer supply. For new energy material capacity expansion, a phosphate resource consumption assessment and regulation mechanism must be established to prevent indiscriminate diversion of agricultural phosphate resources. Enterprises should be encouraged to develop an “integrated mining and chemical production” model, with support for leading companies to enhance risk resilience through industrial chain integration.

Third, strengthen cost control and establish a long-term price stabilization mechanism.

For highly import-dependent raw materials like sulfur, explore establishing a strategic reserve system combining “government reserves + corporate commercial reserves” to hedge against international price fluctuations. Improve the phosphate fertilizer market monitoring and early warning mechanism, promptly releasing production, sales, inventory, and price information to guide rational operations. Flexibly utilize tools such as export tariffs and quotas to dynamically adjust export pacing based on domestic supply and demand conditions.

Fourth, enhance policy coordination and technological innovation to advance the industry's green transformation.

Implement the “Implementation Plan for Promoting Efficient and High-Value Utilization of Phosphorus Resources” jointly issued by the Ministry of Industry and Information Technology and seven other departments. Encourage enterprises to engage in comprehensive utilization of phosphogypsum and environmentally friendly process upgrades. Intensify R&D and promotion of high-efficiency phosphate fertilizers and controlled-release phosphate fertilizers to improve fertilizer utilization rates and reduce resource pressure from the demand side. Support enterprises in energy conservation, emission reduction, and intelligent upgrades through tax incentives and technical renovation subsidies, propelling the industry toward greener and higher-end development.

Ensuring stable supply and prices of phosphate fertilizers is fundamental to food security. The National Development and Reform Commission's decision to suspend phosphate fertilizer exports reflects the nation's resolve to stabilize agriculture amid complex supply-demand dynamics. However, administrative controls remain short-term measures. The industry's long-term healthy development still relies on systemic reforms and the establishment of market-based mechanisms. Only by establishing market-oriented, law-based, and green long-term mechanisms that balance food security, industry growth, and corporate profitability can the phosphate fertilizer industry break free from the cyclical dilemma of “high prices and tight supply.” This will pave the way for high-quality development, providing a solid and stable material foundation for China's food security and agricultural modernization.

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