Explained: How China has caused a DAP supply squeeze

Opening stocks of DAP in India for the current kharif (monsoon) planting season on June 1, at 12.4 lakh tonnes (lt), were below the 21.6 lt for the same date of 2024 and 33.2 lt two years ago.

Much of that is due to China drastically reducing exports and squeezing global supplies of phosphate fertilisers. This comes even as sowing activity has picked up, on the back of 8% above-average monsoon rainfall for the country as of June 29.

Why and how much China matters

DAP is India’s second most-consumed fertiliser, with its average annual sales of 103.4 lt during the last five years next only to the 359 lt of urea. A significant chunk of that – an average of 57 lt for this period – is imported in finished form.

The accompanying table shows that China was until 2023-24 (April-March) a prominent, if not top, supplier of DAP to India. However, imports from China fell from 22.9 lt in 2023-24 to 8.4 lt in 2024-25. Not a single tonne from China has come into the country since the start of this calendar year.

Imports from China fell from 22.9 lt in 2023-24 to 8.4 lt in 2024-25.

China’s export curbs – to ensure that its farmers have access to the product first and also to meet the growing demand for phosphates in the production of EV batteries  has led Indian importers to source more from Saudi Arabia, Morocco, Russia and Jordan. None of these countries have been able to fill the void left by China.

The result: A tightening of the international phosphate market and bullish price pressures.

The most recent DAP import cargoes contracted by Indian companies this month from Jordan were at a landed price (cost plus ocean freight) of $781.5 per tonne. This was as against $633-635 at the start of 2025 and $515-525 last May-June (Chart). The latest reported quotes from suppliers such as Saudi Arabia’s SABIC are at over $810 per tonne, closer to the $950-1,000 highs in March-June 2022 following Russia’s invasion of Ukraine.

The latest reported quotes from suppliers such as Saudi Arabia’s SABIC are at over $810 per tonne.

But it’s not the finished fertiliser alone.

The negotiated landed price of phosphoric acid, a key intermediate used for the domestic manufacturing of DAP, has also risen from $950 per tonne in October-December 2024 to $1,055 in January-March, $1,153 in April-June and $1,258 for the coming July-September 2025 quarter.

The brighter side

All this China-induced supply scarcity is being reflected in DAP sales, which fell from 108.1 lt in 2023-24 to 92.8 lt in 2024-25. The first two months of this fiscal have registered a further dip to 7.7 lt, from 8.8 lt in April-May 2024-25.

That might also be a blessing in disguise though.

DAP contains 46% P and 18% nitrogen (N). There are many in the industry and agronomists who believe that Indian farmers should be discouraged from applying fertilisers with very high individual nutrient content, be it DAP or urea (46% N) and muriate of potash (60% potassium or K).

Most crops don’t need large doses of such high-analysis fertilisers. What they require is balanced fertilisation – through products having nutrients in the right quantities and proportions for effective absorption by the plant roots and leaves. These include complex fertilisers containing N, P, K and S in different combinations.

While sales of DAP have dipped, this is not the case with NPKS complexes. Their sales were up 28.4%, from 110.7 lt in 2023-24 to 142.1 lt in 2024-25, and further by 37.4%, from 8.4 lt in April-May 2024 to 11.6 lt in April-May 2025.

A success story here has been 20:20:0:13, also known as ammonium phosphate sulphate (APS). This NPKS complex has emerged as India’s third most consumed fertiliser after urea and DAP, with sales of 50.4 lt in 2022-23, 53.9 lt in 2023-24 and a record 69.7 lt in 2024-25.

“APS has lower P (20% versus 46%) than DAP. But it has 13% S, which is absent in DAP, besides N and P in a balanced 1:1 ratio. That has made it an effective alternative to DAP, especially in oilseeds, pulses, maize, cotton, onion, chilly and other such sulphur-hungry crops,” an industry source said.

There are many companies – from Coromandel International, Paradeep Phosphates and Mangalore Chemicals & Fertilizers to Indian Farmers Fertiliser Cooperative, Fertilisers and Chemicals Travancore, and Gujarat State Fertilizers & Chemicals – that are now aggressively marketing APS.

The shortage of DAP has also given a boost to sales of single super phosphate (containing 16% P and 11% S), which have increased from 45.4 lt in 2023-24 to 49.3 lt in 2024-24 and further from 3.9 lt in April-May 2024 to 5.1 lt in April-May 2025.

New market dynamics

DAP has, over the past few years, been virtually turned into a controlled fertiliser similar to urea.

The Centre has informally fixed the maximum retail price of DAP at Rs 1,350 per 50-kg bag. It’s another thing that farmers are actually paying around Rs 1,700 for this fertiliser. On the other hand, APS is retailing at Rs 1,350-1,400 and other popular NPKS complexes such as 10:26:26:0 and 12:32:16:0 at Rs 1,700-1,800 per bag.

“We are short of 20 lt of DAP because of China first cutting and then altogether stopping exports. The resultant gap is being met by other fertilisers with lower P content. Farmers have also adjusted to the new supply situation by applying less DAP and more of various NPKS complexes,” the earlier quoted source pointed out.

This may not be bad in the long run, given that India has only limited rock phosphate deposits. It has to, then, import DAP directly or manufacture domestically. But that again requires either the intermediate input (phosphoric acid) or raw material (rock phosphate) to be imported.

Capping or reducing DAP consumption would, perhaps, lead to a more efficient use of imported material and scarce foreign exchange.