Mosaic idles Brazil SSP plants, suspends sulfur purchases on high prices

Fertilizer producer Mosaic announced it is idling its single superphosphate production at two plants in the southeast of Brazil due to recent sharp increases in sulfur prices, while also suspending the raw material purchases, according to a company statement on Dec. 16.

Mosaic "has started activities to idle single superphosphate (SSP) production at its Fospar [Paraná state] and Araxá [Minas Gerais] facilities in Brazil," it said in a press release.

"Mosaic has also suspended future purchases of sulfur. Mosaic may review these decisions after 30 days," the company added.

As a key raw material for phosphate fertilizer production, the rapid increase in sulfur prices has raised concerns among producers, who have seen their margins impacted. Demand destruction was anticipated by various market sources.

The Fospar unit located in Paraná has a production capacity of 450,000 metric tons/year of P2O5 in single super phosphate. The Araxá unit, located in Minas Gerais, has an availability of 1,100,000 mt of phosphates production per year, according to S&P Global Energy data.

Top sulfur buyer

Mosaic is the largest sulfur buyer in Brazil, purchasing between 1.4 and 1.8 million mt per year, according to a source close to the matter.

The company typically purchases several cargoes of around 40,000 mt on a monthly basis, arriving at the Port of Santos, São Paulo. The lineup shows at least four cargoes for Mosaic scheduled to arrive between December and January.

"Whatever has been purchased, will be honored," the source said.

Assessing the impact in the Brazilian market, a local trader said the move appears to be temporary, not structural: "It's not exactly an exit from the market, but rather a reaction to the current price levels."

Amid supply shortages in the global market, Brazil has seen record prices in recent months. By Dec. 11, the CFR price reached $565/mt, a 17-year high for the South American market, according to data from Platts, part of S&P Global Energy.

Other fertilizer producers in Brazil, such as Galvani, have also reported a margin squeeze in SSP production due to higher sulfur prices. This challenge is not limited to Brazil; according to a source trading SSP from Egypt to Brazil, producers worldwide are facing difficulties due to the elevated sulfur costs.

The global tight supply, driven by high demand from China and Indonesia, along with geopolitical conflicts and uncertainties, was worsened by suspended Russian exports. The absence of this traditional exporter removed a key competitive source for Brazilian buyers.

With Middle Eastern producers raising monthly prices to $495/mt FOB in December, demand from the fertilizer industry was expected to be impacted, as phosphate prices have not moved at the same pace.

Capital reallocation

In Brazil, the fertilizer manufacturer has reallocated capital to focus on its core business. On Oct. 29, Mosaic announced a suspension of operations at the Patrocínio mining facility in Minas Gerais for two months starting in November. Earlier in the year, it sold a potash mine in the Northeast of Brazil and a phosphate rock asset in Minas Gerais.

With high prices in the Americas region, Mosaic is about to start negotiations for the Q1 Tampa molten contract with refineries in the US Gulf, which serves as a benchmark in the region. In Q4, the Tampa molten quarterly contract was settled at $310/lt delivered, its highest since Q4 2022.

Platts last assessed the CFR Brazil sulfur price at $565/mt on Dec. 11.