Editorial Article
The Ration Shrank and the Grade Rose
A tonne of feed contains ten kilograms of dicalcium phosphate, which costs RMB 30.6 — 1.02 per cent of a RMB 3,000 tonne of finished feed. That number is the ceiling of this market. The floor is a rock-derived acid cost that exceeds what the product sells for. The whole business lives in the gap between them, and the gap is being closed by an enzyme.
Feed phosphate is the one product in this chain that subtracts value from its own feedstock: on the contained-phosphorus ladder it sits at 0.70 against the element at 1.00. But the more interesting number is the forecast split. Volume grows 1.63 per cent; value grows 3.60 per cent. That divergence is not a pricing assumption — it is a substitution, and it has a name.
Phytase takes the tonnage, and spares the grade
Phytase is an enzyme that lets a monogastric animal liberate the phosphorus already present in its feed grain, which means the formulator can remove inorganic phosphate from the ration. It removes dicalcium phosphate first, because DCP is the cheapest way to hit a phosphorus minimum and therefore the easiest line to cut.
What survives the cut is not more tonnes of the same product. It is a smaller quantity of a better one. Monocalcium phosphate sells for 58.5 per cent more a tonne than DCP — but only 29.68 per cent more per tonne of contained phosphorus. That gap is the whole story of the market: once the ration’s total phosphorus has been cut to the minimum the animal can tolerate, what remains has to be available, and availability is what MCP is bought for.
| Product | RMB/t | P content | RMB per t of contained P | Index |
|---|---|---|---|---|
| Dicalcium phosphate | 3,060 | 18.0% | 17,000 | 0.70 |
| Monocalcium phosphate | 4,850 | 22.0% | 22,045.5 | 0.91 |
| Yellow phosphorus (element) | 24,324 | 100% | 24,324 | 1.00 |
The market is not paying for phosphorus. It is paying for the fraction of the phosphorus the animal can actually absorb, and it pays a 29.68 per cent premium per unit of contained phosphorus to get it. Volume falls. Grade rises. Value grows at twice the rate of tonnage.
The floor, in one division
A tonne of DCP contains 0.180 tonnes of phosphorus, which is 0.4125 tonnes of P2O5, which is 0.6696 tonnes of 85 per cent acid. At the industrial acid price of RMB 7,050 that acid costs RMB 4,720.7 — 1.60 times the entire reported cash cost of the product, RMB 2,950.
Feed phosphate therefore cannot be made from purified acid. The single largest input would cost more than the product sells for. So it is made from crude wet-process acid, and the purification capacity in this chain goes to food, technical and battery applications instead — which is why thermal acid commands a 2.4 times premium outside China and why food-grade salt earns 44.4 per cent over industrial grade for identical phosphorus.
Feed is what the chain does with the acid nobody purifies. That is a structural position, not a temporary one, and it explains why the 0.70 index has not converged toward 1.00 in any year this report covers.
The squeeze, measured
Floor RMB 4,720.7 for purified acid; ceiling RMB 30.6 per tonne of feed. In between, the merchant margin was RMB 130 a tonne in one September assessment and RMB 208.93 at a 6.76 per cent gross margin in an April one. Both are real; they are 60 days apart. That is the amplitude of this market, and it is set by the crude acid price on one side and a formulator’s willingness to add 1.02 per cent to his cost on the other.
The export valve, on a contained basis
Chinese feed-grade DCP exports reached 261,399 tonnes in 2025, up 35.66 per cent, worth USD 125.2m, up 56.60 per cent — realisation USD 478.83 against USD 414.81, up 15.43 per cent. Volume up a third and unit value up a seventh in the same year is a market with more than one thing happening in it.
Put on a contained basis, that is USD 2,660 per tonne of phosphorus leaving the country — against an element benchmark of RMB 24,324, or roughly USD 3,400 at prevailing rates. China is exporting its phosphate in the most dilute form the chain makes, in the same year its DAP exports fell 23.8 per cent. When the high-analysis outlet closes, the low-analysis one opens.
What the forecast is really saying
1.63 per cent volume and 3.60 per cent value is not a demand forecast. It is a statement that the ration keeps shrinking while the grade keeps rising, and that the two partly cancel. The market stated in the parent report — USD 3,937.8m on 7.02 Mt in 2025, reaching USD 5,225.5m on 7.99 Mt by 2033 — is a market where unit value rises from USD 560.9 to USD 654.1 a tonne while tonnage barely moves.
The one thing that would break it is a phytase that removes the last of the inorganic requirement. It has not arrived, because a ration still needs a mineral phosphorus source the animal can absorb under commercial conditions — but the direction is single and it has been single for two decades.