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Analysis on phosphate fertilizer price control policy February 26,* * Seven departments including the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, the Ministry of Commerce, the State Administration for Industry and Commerce, the General Administration of Quality Supervision, Inspection and Quarantine, and the General Supply and Marketing Cooperatives jointly held a national video and telephone conference on fertilizer supply to make arrangements to ensure the use of fertilizer for spring plowing production and stabilize fertilizer prices. During the spring plowing period, the ex-factory price of diammonium phosphate should generally not exceed 4,100 yuan/ton. The current ex-factory price of DAP is around 4,000 yuan/ton. Comment: 1. Fertilizer: The bull market in international agricultural products has boosted the prosperity of chemical fertilizers. Domestic regulatory policies are negative in the short term, but it is difficult to change the long-term trend. Spring plowing is approaching, and the price of agricultural inputs is under great pressure. * * The frequency and intensity of policy intervention are increasing. Especially for phosphate fertilizers, there is great pressure to increase prices. * * On January 15, export tariffs were raised again in 2008. ； On February 26, a price limit of 64% DAP was set to 4,100 yuan/ton, which will be implemented until April. International DAP is rising rapidly. This week's quotation has been at 850-900 US dollars/ton, while last week's quotation was still 780-800 US dollars/ton, and the January quotation was about 650 US dollars/ton. The domestic DAP price has risen to 4,100 yuan/ton (64% content), but the price difference with the international price is still widening. Considering the 35% export tariff, it is still lower than the international price. In addition, compared with the United States and Morocco, the major exporters of phosphate fertilizers, China also has transportation advantages when exporting to Southeast Asia. The international price of urea fell slightly to US$400/ton in the early stage and has been relatively stable recently. ； Domestic spring plowing is about to start, urea prices are mainly stable, and prices in some areas have increased slightly. Potash fertilizer prices have been stable recently, with the CIF price of potassium fertilizer in Southeast Asia being approximately US$500/ton. ； There has been no progress in China's potash fertilizer import negotiations. The international fertilizer supply and demand trend has not changed, and supply is slightly tight in 2008. The supply of phosphate fertilizers was still tight in the first half of 2008. With the completion of Morocco's 1.6 million-ton DAP production capacity and China's Hongfu and other two 600,000-ton DAP production capacities, the supply shortage has gradually eased. Urea opportunities may not be limited to the first half of the year. If grain prices rise, international urea prices will also drive domestic urea prices in the second half of the year. Before China and Russia put potash fertilizer into production, the pattern of international potash fertilizer oligopoly, demand-based production and tight supply will still be difficult to change. Domestic fertilizer supply and prices seek a dynamic balance among international prices, tariffs, price limits, and rising costs. Short-term policy controls hinder price upward momentum, but the long-term price trend will rise. More than half of the world's new nitrogen and phosphate fertilizer production capacity comes from China, and urea and phosphate fertilizer exports account for 15% and 26% respectively of international trade volume. ； If China does not export phosphate fertilizers and urea or does not export enough, international supply will become tighter, international prices will rise further, and the price gap with domestic prices will further widen. If domestic prices rise too fast, * * Further control measures are likely to be introduced. However, factors such as international demand, domestic policy controls and rising resource prices will jointly lead to an upward trend in fertilizer prices in the long term. ； also, * * The actual effect of the price limit policy on urea and phosphate fertilizers remains to be seen. The current price quoted by DAP manufacturers is around 4,000 yuan/ton, slightly lower than 4,100 yuan/ton. ； The price limit prevents DAP from rising further.