Dynamics and strategic behavior in the international phosphate market

Dynamics and strategic behavior in the international phosphate market. The study is based on the effects of the variables of production, demand and stock change on the determination of crude phosphate prices; these variables are characterized by rigidities, which stem in part from the strategic behavior of the main actors. The international market for raw phosphate is 70% controlled by the Office Chérifien Phosphate (Morocco), Russian firms (Russia), Jordan Phosphate Mines Ltd (Jordan), the Gafsa Phosphate Company

(Tunisia) and a group of 8 American companies forming the Phosrock (USA) against several buyers, the most important of which are the EU, India and the USA. Phosrock, which is the world’s largest producer of raw phosphate, is poorly represented on the international market, but dominates the phosphate fertilizer market. OCP is the world’s second largest producer with the leading position in the international market. The oligopolistic nature of the market stems mainly from the dominant position of OCP and Phosrock in world production and in the raw phosphate economic market. Raw phosphate is the main raw material involved in the production process of phosphoric acid, which in turn is essential for the production of phosphate fertilizers. This situation makes it possible to consider the interdependence between the international market for crude phosphate and the derivatives markets. The factors that can explain the evolution of prices and the global phosphate market thus relate to the global dynamics and strategies of market players (Calabria 1997), which imply a tendency to reposition players downstream of the economic sector. The empirical analysis of price dynamics in the international phosphate market is based on the general model proposed by Labys (1999). Specifically, the strategic component is inspired by the Feinberg and Husted (1999) approach with the estimation of reaction functions. To find out the factors that cause imbalance in the international phosphate market, we will first analyze the chronological evolution of the market.