Wednesday, October 17, 2012

Paraquat's HS code adjustment may stimulate its export price

Recently, the Institute for the Control of Agrochemicals, Ministry of Agriculture (ICAMA) system updated the ownership of HS code of 40% paraquat solution——the HS code has been brought under the chapter 38 in Customs tariff from the original chapter 29 since Aug.13, 2012, according to the announcement of relative agricultural departments in China. The adjustment of HS code means that the export rebate rate of 40% paraquat solution will be lowered from 9% to 5%. And it will increase the VAT and reduce the profit of paraquat exporters. Accordingly this adjustment may further stimulate paraquat's export price, according to CCM’s September Issue of Herbicides China News.

According to the definition of the Customs tariff, the 40% paraquat solution is a kind of green liquid containing paraquat technical, emetic, corrosion inhibitor and water. In the Customs tariff, organic compounds is classified into the chapter 29 while miscellaneous chemical products is classified into the chapter 38. Before the HS code adjustment, the 40% paraquat solution was considered as a kind of organic compounds and put under the chapter 29 with the HS code number of 2933399022.

In Aug. 2012, the FOB Shanghai price of paraquat TK rised slightly, after the announcement was issued. Accoding to the quotation from the main paraquat manufacturers in China, such as Nanjing Redsun Co., Ltd. (Nanjing Redsun), Shandong Lvfeng Pesticide Co., Ltd. (Shandong Lvfeng) and Hubei Sanonda Co., Ltd. (Hubei Sanonda), the FOB Shanghai price of 42% paraquat TK was USD2,290/t in Aug., 2012, increasing by about USD80/t from that of July, 2012(USD2,210/t).

Explained by a sales manager in Nanjing Redsun, a company with 24,000t/a of paraquat TK (the biggest capacity in China), the price increase of 42% paraquat TK is attributed to the reduction of export tax rebate and the recent demand increase from the market. In other words, Nanjing Redsun increased the price of 42% paraquat TK to offset the profit decrease resulted from the reduction of export rebate.

It's observed that Nanjing Redsun didn't have much opinion on the adjustment but to raise the price of paraquat in response just like other paraquat manufacturers. 

Recently, the sales of paraquat products in Hubei Sanonda has slipped a litttle. A sales manager of the company explained that it is the price increase of paraquat that led to the sales drop.

It's reported by some media that recently there was an argument between some paraquat enterprises and China Customs that whether the HS code of 40% paraquat solution should be classified into chapter 38 or chapter 29.

In early July, 2012, the Ministry of Agriculture of China issued new regulations on paraquat registration, in a move to follow the official decision of restricting paraquat SL in China. In the new regulation, it defines that emetic, odor agents and colorant should be added into the paraquat solution products. (Herbicides China News 1207: ICAMA implements paraquat restriction)

China Customs considers that because 40% paraquat solution is compounded with emetic, odor agents and colorant, it should be declared under the chapter 38, where the miscellaneous chemical products are classified into.

However, some paraquat enterprises considered that declaring paraquat under the chapter 38 was unreasonable, because the effect of paraquat solution doesn't changed, even though it is added with protective ingredients.

Anyway, this argument has been closed into a conclusion that the HS code of 40% paraquat solution products is put under the chapter 38 from Aug.13, 2012. And the paraquat enterprises should obey the government's decision about paraquat export.

Source: Herbicides China News 1209

Content of Herbicides China News 1209:
Asset exchange of Shandong Dacheng ends
Anhui Huaxing meets performance recovery in H1 2012
Rosi Chemical achieves the 2nd formal metamitron registration in China
Jiangsu Yangnong invests new herbicide production lines in Ningxia
Fengshan Group’s trifluralin expansion approaches the end
Number of 2,4-D acid technical manufacturers increases in China
Quizalofop-P-ethyl meets small manufacture in China
Stagnant tribenuron-methyl market continues in China
Diflufenican market remains small in China
Jiangsu Lvlilai resumes herbicide business after the relocation
Anhui Zhongshan enhances mesotrione manufacture
Xinyi Zhongkai sees stable quinclorac supply
CAC Nantong supplies fluorochloridone easily
Paraquat's HS code adjustment may stimulate its export price
Yellow phosphorus price rebounds in early Sept.

Herbicides China News, a monthly publication issued by CCM International on 15th of every month, provides you with the latest occurrences, exclusive analysis on the market trend as well as professional reviews on competitiveness of companies, products and relative industries in China’s herbicide industry.

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