Thursday, October 11, 2012

China’s DAP export difficult to firm up in H2 2012

Subjected by India’s decreasing purchasing power and cooling international economic environment, China’s export of DAP seemed difficult to firm up in the remainder of 2012, according to CCM’s September issue of Phosphorus Industry China Monthly Report.

In H1 2012, China totally exported 269,847 tonnes of DAP, only accounting for 42% of that in the same period of last year. Although the export volume of DAP saw a significant rebound to 423,061 tonnes in July, it still couldn’t catch up with the previous level, reserving the overall downward trend this year.

China’s export of DAP is generally concentrated in June and Sept., due to the changes in export tariff over time (In 2012, export tariff of DAP is 7% from June to Sept. and 110% for the other months). However, an insider from one China’s leading exporter said that they were very cautious about the international market in 2012, despite DAP’s low export tariff occurred in June.

It’s too difficult to profit from the export of DAP. China’s export of DAP was hit badly by India’s decreasing purchasing power and depressed international price of DAP”, DAP traders complained.

Indeed, depressed international environment led the FOB price of DAP around prime export countries like the US, Tunisia and Morocco to keep downtrend in 2012. Compared to the same period of last year, the global FOB price of DAP nearly decreased by USD100/t in July. Thus China had to lower its export price in order to remain its competitiveness.

However, the downside for DAP’s price was more limited in China than that of other export countries. As Tunisia and the US applied zero export tariff for DAP, their export costs were less than that of China. China’s export of DAP was bound to suffer more from the fall in the international DAP price.

In addition, India, as China’s largest DAP purchaser, lowered its purchasing price for imported DAP in 2012, due to the decreasing purchasing power.

In accordance with the new subsidy policy released by India’s Cabinet Committee on Economic Affairs (CCEA), the subsidy on DAP was slashed to USD282/t since April 2012, decreasing by 27.4% compared to the level before April. Besides, the exchange rate of rupee against dollar generally bounced along near the bottom this year since substantial decline from 2011 (July 29th, 2011: INR44.42 = USD1; July 30th, 2012: INR56.21 = USD1).

All these weighed on India’s purchasing power on DAP. According to China’s DAP traders, China’s FOB price for DAP should be below USD550/t as India’s acceptance of DAP’s CFR price remained around USD580/t, which was quite close to cost. Therefore, it’s still difficult to drive up China’s export, although the demand from India keeps strong.

Source: Phosphorus Industry China Monthly Report 1209

Headlines of Phosphorus Industry China Monthly Report 1209
Editor's Note
Headlines of Phosphorus Industry China Monthly Report 1209

Phosphorus ore
Company Dynamics: Sichuan Hebang to further step up phosphorus sector
Company Dynamics: China Baoan likely to continue its phosphorus project    
Policy & Legislation: Five provinces to formally implement phosphorus exploitation regulations  

Yellow Phosphorus
Company Dynamics: Large gap between Hubei Xingfa and Jiangyin Chengxing   

Phosphate Fertilizer
Industry Dynamics: China’s DAP export difficult to firm up in H2 2012 
Policy & Legislation: China to revise quality standard for SSP   

Fine Phosphate Chemical
Industry Dynamics: Qinzhou to develop phosphate chemicals industry    
Policy & Legislation: Capacity expansion for phosphate chemicals further curbed 

Global Insight
Production cut of ammonium phosphate upsurges overseas

Supply & Demand
Market review of prime phosphate chemicals in August 2012 

Import & Export
International trade situation of phosphate chemicals in July 2012

Price Update… …

Phosphorus Industry China Monthly Report, a monthly publication issued by CCM on 15th of every month, provides you the latest information on company dynamic, industry dynamic, factors impacting the price fluctuation, technology improvement, supply & demand of China's phosphorus industry.

(Guangzhou China, Aug.15, 2012)

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