Material Insights · Understanding the Material World

Ammonia and Phosphate rock

DAP, a leading phosphate fertiliser, is phosphoric acid from phosphate rock neutralised with ammonia, about 0.22 t of ammonia per tonne, so the two are co-inputs whose costs add up in the finished product, and India imports a large share of both.

Ammonia (chemical) and Phosphate rock (commodity): 5 relationships.

How they are linked

1. Co-inputs to DAP and MAP

Physical flow · Strong · Ammonia and phosphate rock → DAP

Phosphate rock is digested in sulphuric acid to make phosphoric acid, which is then combined with ammonia and granulated into DAP or MAP, so every tonne needs both.

  • 18% N, 46% P2O5 nutrient content of DAP
  • about 0.22 t ammonia per tonne of DAP, implied by its 18% nitrogen
  • over 95% US phosphate rock used to make wet-process phosphoric acid, 2025

The 0.22 t figure follows from chemistry: ammonia is about 82% nitrogen, so 18% nitrogen in DAP needs about 0.22 t of ammonia per tonne. The ratio is fixed, so DAP output sets demand for both inputs in step.

Sources: Jordan Phosphate Mines Company; USGS

2. Price link: co-input for DAP

Cost and price · Medium · Both ways

Gas-driven ammonia spikes raise finished phosphate fertiliser prices and feed back slowly into phosphate rock contracts.

  • 0.13 monthly change correlation
  • 0.59 12-month change correlation
  • 1.44 fitted elasticity

Using the US nitrogen fertiliser index as a proxy for ammonia, monthly moves are only loosely linked but yearly changes correlate at 0.59, with ammonia tending to lead by about six months.

Sources: Material Insights (World Bank, FRED, IMF data)

3. Plants sit at the rock, ammonia is shipped in

Joint production · Medium · Phosphoric acid made at the mine complex; ammonia imported

Phosphate producers often make phosphoric acid and DAP next to their mines, while ammonia, which depends on cheap gas, is frequently bought in and shipped as a refrigerated liquid.

  • 1,500 t/day capacity of each Jordan Phosphate Mines DAP unit
  • about -33 °C storage temperature of imported ammonia at the same plant

At Jordan Phosphate Mines, phosphoric acid from the company's own complex is combined with imported ammonia held in 30,000 t and 10,000 t tanks. Indian DAP and NPK makers follow the same pattern: IFFCO, Paradeep Phosphates and Coromandel International together sought 536,000 t of imported ammonia for delivery between June and August 2026.

Sources: Jordan Phosphate Mines Company; AgroSpectrum India

4. India imports both inputs

Shared risk · High in India · Indian DAP depends on imported rock and ammonia

India has little phosphate rock and not enough ammonia for its phosphate plants, so domestic DAP rests on imported raw materials as well as imported finished DAP.

  • about 90% India's import dependence for rock phosphate, 2021
  • 53% share of India's DAP needs imported, 2023-24
  • 536,000 t ammonia imports sought by Indian fertiliser makers for June to August 2026

This double dependence means a gas price shock, through ammonia, and a phosphate export curb, through rock or acid, can hit Indian DAP costs at the same time. India mined only about 1.5 Mt of phosphate rock in 2025, against 110 Mt in China.

Sources: USGS; Press Information Bureau, Ministry of Chemicals and Fertilizers; CareEdge Ratings; AgroSpectrum India

5. Subsidy covers both nutrients in DAP

Policy · High in India · Nutrient Based Subsidy pays for the N and P in DAP

India's Nutrient Based Subsidy pays per kilogram of nitrogen and phosphorus, so DAP's subsidy reflects the cost of both its ammonia and its phosphate.

  • Rs 37,952 crore NBS budget for rabi 2025-26

The rabi 2025-26 rates were set after reviewing world prices of urea, DAP, MOP and sulphur. When ammonia and rock costs rise together, either the subsidy rises or DAP makers' margins shrink.

Sources: Press Information Bureau, Government of India

For investors

Key learnings

  1. DAP needs ammonia and phosphate in fixed proportion, so DAP margins depend on both input prices against the DAP price and subsidy.
  2. In the site's data ammonia, proxied by the US nitrogen index, has tended to lead phosphate rock prices by about six months, a possible early signal for rock contracts even though the monthly link is loose.
  3. Indian DAP makers are exposed to imported rock and imported ammonia at once, so gas and phosphate shocks compound.

What to track

  • Ammonia CFR India or Tampa price: Leading indicator for DAP cost and later rock prices (Weekly · Argus or CRU)
  • DAP price less ammonia and phosphoric acid cost: Conversion margin for DAP makers (Monthly · trade press and company results)
  • NBS rates for N and P: Sets how much of input cost reaches farmers (Twice a year · Department of Fertilizers)

For policymakers

Key learnings

  1. India's DAP supply depends on imported phosphate rock and ammonia as well as imported DAP, so self-reliance needs action on both inputs.
  2. Long-term rock and ammonia supply deals, and joint ventures at phosphate mines abroad, reduce the double exposure.
  3. Gas prices reach phosphate fertiliser through ammonia, so energy shocks raise the cost of the subsidy for both N and P.

What to track

  • India imports of rock phosphate, phosphoric acid and ammonia: Exposure of domestic DAP output to foreign inputs (Monthly · DGCIS)
  • Domestic DAP production versus imports: Progress towards self-reliance (Monthly · Department of Fertilizers)

India

India imports about 90% of its rock phosphate and over half its DAP, and its phosphate plants also buy ammonia abroad, so DAP costs and the Nutrient Based Subsidy are exposed to both gas and phosphate markets.

Sources

  1. Diammonium phosphate, Jordan Phosphate Mines Company (2025)
  2. Mineral Commodity Summaries 2026: Phosphate rock, USGS (2026)
  3. Price correlation, Material Insights, Material Insights (World Bank, FRED, IMF data)
  4. Action plan for fertiliser self-reliance (PIB release), Press Information Bureau, Ministry of Chemicals and Fertilizers (2021)
  5. Fertiliser sector report, CareEdge Ratings (2024)
  6. India's fertilizer giants move to secure 536,000 MT of ammonia imports amid rising demand, AgroSpectrum India (2026)
  7. Cabinet approves Nutrient Based Subsidy rates for Rabi 2025-26 on phosphatic and potassic fertilisers (PIB release, copy), Press Information Bureau, Government of India (2025)