Adjustment of Fertilizer Export Policy in 2014

By CnAgri2013-12-23 10:15:30 Print

Recently, Customs Division of Finance Ministry announced to adjust import and export tariffs of some commodities dated from Jan. 1st 2014. For fertilizer industry,  urea and DAP export  is still divided into off-season and boom season. For urea, the off-season is from July to October and the tariff is set as RMB40/MT; the rest months are boom season and the tariff is levied in the following way: unit price×15%(tentatively)+RMB40/MT. For DAP, the off season is from May 16th to Oct, 15th and the tariff is set as RMB50/MT; the rest months are boom season and the tariff is levied in the following way: unit price×15%(tentatively)+RMB50/MT.

In 2014, take urea export price of RMB2000/MT as an example, if enterprises choose to export urea in off-season, tariff of RMB40/MT will be levied and if choose boom season, RMB340/MT will be levied. In 2013, however, the tariff is RMB40/MT in off season but RMB1540/MT in boom season. In spite urea export will be normal in the next first half year, enterprises are still straddling since traders’ profit is poor with current international price. In domestic market, winter storage of fertilizer is still slackly going on. Lack of  basic demand, manufacturers have not so much rights of holding price high. But as downstream is looking for opportunity to purchase, once the price declines properly, a wave of purchase will be led.

For phosphorus fertilizer, the adjustment brings more favors: firstly, standard price is canceled and only tariff of RMB50/MT is levied in off-season; secondly, export tariff in boom season declines significantly. In 2013, export tariff is 80%-90% of export price, which basically blocks phosphorous fertilizer export. It is generally believed the adjustment firstly gains export opportunity for enterprises and increases their profit margin and secondly is favorable for export in boom season, which relieves surplus capacity. Whether phosphorous fertilizer, especially DAP market can see improvement next year mainly depends on international price, which once rises will drive export to increase and bring small boom in Spring. Seeing from current international demand and materials in upstream, international DAP market is very likely to go up in next spring. 
 
For potash, export tariff of potassium sulfate and potassium chloride declined RMB1400/MT to RMB600/MT in 2014. Though the policy is loose, the export condition next year is still not clear. For firstly potassium chloride production concentrates in Qinghai and Xinjiang, transportation is one major problem. Currently manufacturers mainly sell goods to domestic factories and ttraders; secondly, international demand for potash mainly come from eastern and southern Asia and America, it is hard for China to compete with their major exporters, Russia and Canada; thirdly, China still need potash imports and export of potassium resources is not favorable for China potash industry.

From “China Fertilizer Market Weekly Report”