Tuesday, December 17, 2013

China's phosphate fertilizer export tariff to be reduced in 2014

Tu Qiaohong, Deputy Director of Department of Trade, NDRC, stated that, while drafting the new export tariff policy for 2014, policy makers are considering reducing the export tariff of fertilizer by a large percentage on the high season and by a small margin on the off-season. Export tariffs for phosphate fertilizers (MAP, TSP and DAP) in 2013, were 80% on the high season (Jan. 1–May 15, Oct. 16–Dec. 31) and 5% on the off-season (May 16–Oct. 15).

Spring and autumn are generally the high season for fertilizer use in China. Aiming to relieve imbalances brought on by seasonal demand and continuous production, to prioritize the domestic demand and restrict exports, and to stabilize domestic prices in order to protect farmers against price surges during the high season, the Tariff Policy Committee of the State Council (TPCSC) instituted different tariffs on fertilizers (Urea, TSP, DAP and MAP), during both high and off-seasons, on Dec. 1, 2008. The tariff is a sliding duty, levied according to a benchmark price determined by China Customs.

Discussion surrounding these tariffs' reasonableness has never stopped since their implementing in the end of 2008. Although export tariffs had been decreasing and the benchmark price had been on the rise around 2009, the aggravation of fertilizer surplus over the past several years has amplified a general call for adjusting the export tariffs. Due to widespread and intensive investment in the domestic fertilizer industry, fertilizer supply (especially nitrogen and phosphate fertilizer) were already capable of meeting the demand since 2006 or so, and over the past several years, the industry has been plagued by oversupply. Given the extreme pressure brought on by overcapacity in the domestic market, manufacturers would be glad to see the reduction of the special tariffs and to fully engage in competition in the world market. With the overcoming of the past decade's short supply of fertilizer, the original motives for implementing different export tariffs have lost their strength.

If the phosphate fertilizer export tariff is reduced in 2014, it will definitely ease much of the domestic industry's considerable stress. However, it will likely lead to Chinese phosphate fertilizer pouring into the global market in larger volumes. Dealers and manufacturers in other countries should, therefore, exercise caution and develop business strategies accordingly. Overall, the global situation of the phosphate fertilizer industry may be in worse shape in 2014.

Wengfu's Chuanyandong phosphorus ore body began production in November
Integration of phosphorus ore exploitation in Hubei Province achieved initial success
New aluminum IMC membrane to be widely applied in the phosphorus industry
China's phosphate fertilizer export tariff to be reduced in 2014
Luxi Chemical's new urea sulfuric acid fertilizer plant succeeds in its first trial
The Fertilizer Off-season Commercial Reserves Management Method to be revised
Wengfu Group and Kailin Group to benefit in the long term from the improvement of Guizhou Province's water transport
Tanzanian phosphorus: an opportunity for Chinese enterprises
India to continue levying anti-dumping taxes on China's phosphoric acid
Kailin Group's new multi-purpose TSP device achieved projected output and standard in November
International trade of phosphate chemicals in Oct. 2013
Market review of prime phosphate chemicals in Nov. 2013
Price monitoring of phosphate chemicals in Nov. 2013 24

Phosphorus Industry China Monthly Report, issued by CCM on 15th, keeps providing the latest company dynamics related to China’s phosphorus industry, and market analysis on supply and demand, import and export as well as global insight.

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