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The Post-\"0 Tariff\" Era: Countdown to the 2019 Tariffs on Fertilizer Imports and Exports Author/Source: China Fertilizer Network Date: 12-12-2018 Clicks: 20 It is now mid-December, and once again we are at a critical point when the tariffs on fertilizer imports and exports for the coming year will be determined. Looking back at the dates of confirmation and release over the past 10 years, it should be announced by the end of this weekend or within the next week. Although we are in a situation characterized by \"tax hikes as a form of pretense,\" it’s hard to say whether there will be any changes, but it’s definitely approaching. The earnest hopes placed on the phosphorus fertilizer conference earlier have long since turned into illusions; can new tariffs bring hope to the currently stagnant fertilizer market? Let’s first take a look at the tariff situation in 2018: export tariffs of \"0%\" were applied to most products. The only ones for which export tariffs were still imposed were various potassium fertilizers, as well as binary and ternary compound fertilizers containing potassium, along with phosphate rock ； Export tariffs on triple-component compound fertilizers and phosphate rock have been reduced ； No export tax rebate. On the import side, as usual, there are not many things to pay attention to. Let’s provide a brief analysis of the import and export figures for some major fertilizer types as of 2018 to date: The total volume of exports has decreased significantly, with urea being the most affected; in the first 10 months, only 1.36 million tons were exported, a drop of over 60% compared to the previous year. On the other hand, the export volume of diammonium phosphate during those 10 months reached 6.21 million tons, representing a growth of around 14% on a year-on-year basis. As for triple-composite fertilizers, whose export volume increased by nearly 700% on a year-on-year basis, and potassium fertilizers, whose exports declined significantly, their overall volumes remain relatively small when compared to domestic supply and demand figures; therefore, no further details will be provided for now ； The total volume of imports increased, with urea remaining the most imported substance. Although 164,000 tons were imported in the first 10 months, which is not a large amount, the increase of 3,189% is quite striking. While the increase in imports of compound fertilizers is far smaller than that of exports, their overall volume is still much higher than that of exports; 1.24 million tons were imported in the first 10 months. The only type of fertilizer whose imports decreased was potassium chloride. Due to delays in concluding large-scale contracts, market conditions weakened in the second half of the year, resulting in a 5.4% decrease in imports to 5.88 million tons in the first 10 months. So, taking into account the above data and the current situation in the fertilizer market, what aspects should we look forward to or pay attention to regarding the new tariffs? (To add a bit of fun to the otherwise dull analysis of this document, a “star rating” system has been introduced; the full score is five stars, with one star being the lowest rating.) First, whether the export tariffs on potassium fertilizers will be reduced. Hope index: Five stars (especially for potassium sulfate companies) / Probability index: One star. About 50% of potassium chloride in our country relies on imports; especially this year, domestic mineral supplies are insufficient and production has even decreased. Under such circumstances, the possibility of reducing export tariffs is virtually zero, and even if they were reduced, it would still be a tariff level that does not allow for exports. What about other potassium fertilizers such as potassium sulfate downstream? Especially for potassium sulfate, where capacity is already overcapacity and the industry is under great pressure at the moment, **will the export tariffs on it be reduced appropriately? Given the special nature of the basic raw material, potassium chloride, the chances of this happening are actually low. Yet, in order to ensure a stable supply of potassium fertilizers, it is not appropriate to allow excessive restructuring in the industry’s production capacity; therefore, it is possible to introduce slight relaxations. But all we can say is, let’s hope so. Second, whether the export tariffs on ternary compound fertilizers will be further reduced. Hope Index: Five stars/Probability Index: Three stars. The situation for winter storage this year is not favorable, and the most evident aspect of this is seen in compound fertilizers. At present, the average operating rate of the major manufacturers in this sector is less than 40%. Most of the advance payments made for the first round of winter storage efforts ended in failure. Recently, the falling prices of raw materials have forced manufacturers to adjust their prices again, with some seeing reductions of several dozen yuan. It can be said that such a sluggish market situation is rare in history, and it is not conducive to the healthy development of the compound fertilizer industry. As is well known, compound fertilizers are products with high added value. The export of such fertilizers involves not only the export of the products themselves but also the dissemination of technology, services, and even Chinese brands on the international stage. This in turn inevitably stimulates the development of the domestic compound fertilizer industry, which is in line with the agricultural needs of our country. Third, whether there will be export tax rebates. Hope index: Five stars/Probability index: Two stars. Fertilizer companies are in a difficult situation, so they hope for reduced burdens ； But it’s harder for farmers, so **the prerequisite for encouraging exports is that there is enough demand within the country, and the prices are reasonable. It’s not impossible to reduce the price for special varieties; it’s also possible to make temporary reductions during special periods. As I said before, I hope that such things will happen. Fourth, no fertilizer-producing country will yet restore or raise export tariffs. Hope index: One star/Probability index: One star. Without any reason, it’s unlikely; I won’t say more. Let’s wait and see the final outcome regarding the import and export tariffs on fertilizers in 2019!