Impact of supply and demand on the price development of phosphate (fertilizer)

In this paper the development of the phosphate price is investigated. The historical price development is analyzed and a prospect to the future development is given. Generally the price is determined by the supply and demand situation. The phosphate reserves minable for the production of fertilizer are diminishing in quality and quantity. The mining of deeper soil layers leads to higher production costs and the phosphate rock is increasingly contaminated with heavy metals like cadmium and uranium. Consequently the quantity of phosphate economically minable at actual costs is decreasing. Additionally substantial costs for environment protection and transportation increase the phosphate price. Since 2007 the supply situation is tight due to production capacity shortage. For this reason the phosphate price increased rapidly. New mines and processing plants are supposed to be in operation by 2012. Most of the reserves are located in Africa and in the Middle East. Asian Countries, particularly India, are investing in processing plants to satisfy their increasing demand. The demand for phosphate is increasing due to population growth and the necessity of nurturing that population. The growth of energy plants for the production of agro-fuels is another factor that increases the phosphate demand. Since the development of agro-fuel production is difficult to predict, two scenarios - business as usual and increased agrofuel production - are distinguished. The phosphate price estimated for 2030 is about US$ 100 and 120 per tonne respectively in both scenarios.