Fertilizer export tariff cut: hard to improve profitability

On June 23, the Ministry of Finance issued an announcement that, starting from July 1, 2009, temporary tariffs on the export of grain products such as wheat, rice, and soybeans will be cancelled, and yellow phosphorus, phosphate rock, synthetic ammonia, phosphoric acid, and ammonium chloride will be eliminated. Special export tariffs for heavy calcium phosphate, binary compound fertilizers and other products will continue to impose an export tariff of 20% on yellow phosphorus, and continue to impose temporary tariffs on exports of 10% to 35% for other phosphorus and phosphate ore, for synthetic ammonia, Phosphoric acid, ammonium chloride, heavy superphosphate, and binary compound fertilizers (including industrial fertilizers) are all subject to a 10% temporary export tariff. Extending the urea, monoammonium phosphate, and diammonium phosphate during the off-season period will extend the application time of the off-season export tax rate for one month, and extend the application time of the off-season export tax rates of monoammonium phosphate and diammonium for one and a half months. <<< For more exciting click to enter

Domestic prices of nitrogen and phosphate fertilizers are higher than international prices, and exports can only absorb excess domestic production capacity.

At present, domestic urea prices are RMB 50/t higher than international prices, domestic DAP prices are RMB 500/t higher than international prices, and exports are not profitable. The domestic nitrogen fertilizer and phosphate fertilizer production capacity is about 20%. After the reduction of export tariffs on chemical fertilizers, although exports cannot be profitable, they will help to absorb excess domestic production capacity.

Phosphorus ore prices are significantly lower than international prices, and exports provide substantial benefits

Phosphorus ore is a relatively scarce product. At present, the domestic and international price difference is about 380 yuan/ton. After releasing the export, the export of phosphate ore will increase significantly.

Fertilizer export tariff policy history

The state has been strictly controlling the market price of fertilizers, resulting in lower domestic prices than in the international market. In the first half of 2007-2008, the domestic exports of nitrogenous fertilizers and phosphate fertilizers hit record levels. In order to control the export of domestic chemical fertilizers, relevant departments in 2008 repeatedly raised domestic chemical fertilizer export tariffs to reduce the amount of fertilizer exports. In 2009, global demand fell, domestic excess fertilizer production capacity was severe, and the country reduced its tariff export rate to absorb excess domestic production capacity.