Impact of China's Export Restrictions on Fertiliser Supplies
Overview
China has imposed export restrictions not only on rare earth elements but also on di-ammonium phosphate (DAP), a key fertiliser. This impacts global supplies, particularly affecting India, causing significant concerns in agriculture and pricing pressures in the fertiliser market.
Importance of DAP in Indian Agriculture
- DAP is the second most-consumed fertiliser in India, with average annual sales of 103.4 lakh tonnes (lt), trailing only urea.
- India imports a substantial portion of its DAP needs, with an average of 57 lt imported annually.
- China was a major supplier, contributing 22.9 lt in 2023-24, but this dropped to 8.4 lt in 2024-25, with no imports since the start of the calendar year.
Supply Disruptions and Price Implications
China’s export curbs aim to prioritize local farmers and meet the rising demand for phosphates in EV battery production, forcing India to seek alternative suppliers like Saudi Arabia, Morocco, Russia, and Jordan. However, these countries haven't fully compensated for the deficit, leading to a tightened international phosphate market and increased prices.
- Recent DAP import prices from Jordan reached $781.5 per tonne, up from $633-635 at the start of 2025 and $515-525 in mid-2024.
- Prices of phosphoric acid, an intermediate for DAP production, rose from $950 per tonne in late 2024 to $1,258 for the July-September 2025 quarter.
Shifts in Fertiliser Use and Market Dynamics
The supply crunch has resulted in decreased DAP sales, from 108.1 lt in 2023-24 to 92.8 lt in 2024-25, with a further decline in early 2025. This shift has prompted Indian farmers to adapt by using alternative fertilisers such as NPKS complexes, which offer balanced nutrients in various crop-specific formulations.
- Sales of NPKS complexes increased by 28.4% from 110.7 lt in 2023-24 to 142.1 lt in 2024-25.
- Ammonium phosphate sulphate (APS), an NPKS complex with balanced nutrient composition, has become the third most consumed fertiliser in India, reflecting a trend toward more balanced fertilisation strategies.
- Single super phosphate sales also rose from 45.4 lt in 2023-24 to 49.3 lt in 2024-25.
Long-Term Implications
The shortage of DAP has necessitated a shift towards fertilisers with lower phosphorus content, which might be beneficial for efficient resource use, given India's limited rock phosphate reserves. This could lead to more sustainable agricultural practices and conserve foreign exchange needed for imports.
Conclusion
China's export restrictions have significantly impacted global DAP supplies, compelling India to seek alternative fertilisers and adapt to a changing market. This situation underscores the importance of balanced fertilisation and efficient resource use in Indian agriculture.
