China's Diammonium Phosphate (DAP) market has witnessed a period of relative stability throughout February 2024, despite facing internal pressures and a decline in global trade activity. This stability was primarily attributed to the limited export sanctions and dampening interest in the fertilizer market due to the Lunar New Year in Asia.

In China, the Government restrictions on DAP exports have capped the supply available to the international market, leading to more DAP remaining available domestically. Moreover, the lack of clarity regarding future export quotas keeps traders hesitant to engage in large transactions which resulted in customs clearance for DAP exports to remain suspended, further impeding international trade. Furthermore, holiday absence played a crucial role in dampening the market activity for the fertilizer market including DAP. Market activity has significantly decreased as participants enter the Lunar New Year holiday period, leading to limited buying and selling which led the market participants to stay on the sidelines amid a lack of fresh updates on the phosphate export policy. DAP plant operating rates in China have remained moderately stable despite the overall market inactivity which affected the offered quotations to remain unchanged at USD 560/MT, DAP FOB Qingdao, China during the fourth week of February 2024. As per the market reports, due to the ongoing pressure on domestic prices in China, there are once again no newly verified DAP sales to be reported during this timeframe and the utilization of DAP capacity allegedly grew by 0.90% to around 55.73%.

As per ChemAnalyst, the market of DAP in China is foreseen to remain muted and the Chinese government is expected to reveal export quotas for 2024 not earlier than March. Local sources in China anticipate that DAP export customs clearance will be suspended until at least the end of February. CRU anticipates that bulk DAP exports from China won't start up again until early Q2.

Moreover, a few market sources present at the FLA Miami conference said that the government will begin releasing DAP export limits in early April. This suggests that after a 30-day inspection period, ships could not be able to load in Chinese ports until early May. However, the global DAP prices remain impacted by China's limited exports, with phosphates remaining relatively expensive compared to other nutrients until their return to the international market. While the seasonal rise in demand post-holidays might support price stability, the uncertain future of export quotas and lower phosphate prices raise concerns about potentially bearish sentiment in the market.