The government has recently made significant changes in fertilizer export policy.
Beijing Orient Agribusiness Consultant Limited Nov. 20 2008
Independent ? Objective ? Forward Looking Page 2 of 13
Fertilizer export tax is cut down from 120 ~ 175% to 10% for urea, DAP, MAP and TSP during Dec.
~ Jan. and by 25% for other fertilizer products. As domestic DAP and MAP prices are 30% below
the international market, phosphate compound fertilizer exports are expected to expand
substantially. But Chinese urea has no price advantage in the international market currently.
Fertilizer exports usually enjoy a low export tariff in the off-season of sales. The last quarter of a
year used to be defined as the off-season of sales. By the new policy, the off-season of sales
includes Jan., July, Aug. and Nov. 16 ~ Dec. 31 for urea, Jan., June, July, Nov. and Dec. for DAP
and MAP, and Jan. and June ~ Dec. for TSP.
Fertilizer export base price for the off-season and sliding duties are introduced in fertilizer export
policy for the first time. The export base price is RMB2,300/MT for urea, RMB4,000/MT for DAP,
RMB3,700/MT for MAP and RMB3,100/MT for TSP, higher than the domestic market price by
RMB600 ~ 1,000/MT. When fertilizer exports pick up, the base prices may help bring up domestic
price.
Domestic fertilizer market is dominated by a surplus currently due to blocked exports and weak
consumption. DAP stock is as much as 1.2 million MT. Under the new policy, China is predicted to
export 400,000 ~ 500,000 MT fertilizer during Dec. ~ Jan., which may ease the domestic surplus.
Considering more state subsidy for farm material consumption and the favorable export policy,
fertilizer price is predicted to bottom out around the end of 2008 and run high during the spring
plowing. Fertilizer industry? losses are expected to be reduced gradually.
