Yimao Insights: Rumors of adjustments to export tariffs on binary compound fertilizers are circulating widely

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Chemical Trade Reports: Recently, there have been many rumors in the market regarding adjustments to export tariffs on binary compound fertilizers, heavy calcium carbonate, and sulfuric acid an. As for binary compound fertilizers specifically, the prevailing view is that their export tariffs are set to be adjusted; the new tariff policy is expected to be announced around mid-September, with official implementation starting on October 1st. The specific tax rates are likely to be similar to those applied to triple compound fertilizers – an export tariff of 110% from January to September, and 95% from October to December. 　　Based on the current situation, there is a certain possibility of adjusting the export tariffs on binary compound fertilizers in the near future. Starting from September 1, the export deposit for urea has been increased; it is said that the export deposit for phosphate ammonium has also been adjusted accordingly. With these measures in place, there is a tendency to further restrict the export of nitrogenous and phosphatic fertilizers. According to statistics, domestic exports of monoammonium phosphate from January to July amounted to 248,900 tons, representing a 4.6% increase compared with the same period in 2010 ； The export volume of diammonium phosphate was 1.1881 million tons, a 20.5% decrease compared to the same period in the previous year, indicating an overall downward trend in the export volume of phosphatic ammonium compounds. However, the total export volume of domestic binary compound fertilizers from January to July was 1.248 million tons, while the annual export volume for the whole of 2010 was only 0.748 million tons. Moreover, some of the export orders for binary compound fertilizers were scheduled for delivery in August and September, so it is expected that export volumes will continue to rise during these months as well. Roughly estimated, the output of monoammonium phosphate exported in the form of nitrogen-phosphorus compound fertilizers amounted to around 500,000–600,000 tons from January to July. Ammonium chloride and sulfuric acid an are also exported abroad in the form of binary compound fertilizers. Currently, the price of the 20-20-0 dual-component fertilizer is $415–420 per ton (FOB). The price of 64% diammonium phosphate in China is 630–650 yuan per ton (FOB). Comparing the two, since the dual-component fertilizer is not subject to any base price restrictions and is subject to a uniform tariff of 7%, it represents the cheapest option for exporting nitrogen and phosphorus compounds. Therefore, during the peak period of international demand for phosphate ammonium, binary compound fertilizers seem to be more favored over phosphate ammonium at relatively higher prices. From the perspective of curbing the export of nitrogen and phosphorus, it is likely necessary to adjust the export tariffs on binary compound fertilizers. 　　If the policy of imposing strict export tariffs on compound fertilizers comes into effect officially on October 1, it will have a certain impact on the domestic compound fertilizer market. 　　Firstly, in the middle and late August, some companies that were handling orders for the export of binary compound fertilizers completed the delivery of their previous orders. Recently, some of these companies are interested in taking on new orders; most of these new orders will be produced in October and delivered in the middle and early part of November, with some orders even to be fulfilled by the end of the year. If new policies are introduced, they will surely have an impact on the production of some enterprises. 　　Secondly, the impact on raw material prices. Recently, apart from the Jiangsu region, ammonium chloride prices in China have seen a slight decline; however, this has little impact on the cost of compound fertilizers. If the new policies are implemented, ammonium chloride prices are likely to drop significantly in the short term, resulting in a reduction in the production costs of compound fertilizers of over 100 yuan per ton. Regarding monoammonium nitrogen, the international market does not show much acceptance for low-concentration variants such as those with 55% nitrogen content produced in China. If exports of binary compound fertilizers are restricted, monoammonium nitrogen will still be primarily used in the production of domestic tertiary compound fertilizers. Given the weak demand for compound fertilizers, the future demand for monoammonium nitrogen looks uncertain, leaving room for further adjustments in its prices. Once again, the impact on compound fertilizer distributors. At present, compound fertilizer distributors in the Central Plains region already have stock prepared. From mid-September to October, the peak season for fertilizer use in autumn arrives, and some replenishment will take place. Since the purchased raw materials are mostly high-priced compound fertilizers from earlier periods, even if the prices of these raw materials drop in October and thus the prices of compound fertilizers fall, this has little impact on the wholesale prices in the compound fertilizer market in this region. However, as domestic compound fertilizer manufacturers began to supply the winter storage needs of the Northeast region starting in November, the decline in compound fertilizer prices may boost the enthusiasm of dealers in that region to make purchases. The enthusiasm of dealers in the southern region for building modest inventory levels will also increase. Overall, if the export tariffs on binary compound fertilizers are adjusted, the implementation in October will have a minor impact on the entire compound fertilizer market. If it is implemented starting in January next year, since spring is the period with the highest fertilizer consumption of the whole year, adjustments in the prices of relevant raw materials could lead to greater fluctuations in the compound fertilizer market. However, a decision on adjusting the tariffs for binary compound fertilizers has not yet been made, and everything remains to be seen. http://www.icis-china.com/chemease/Search/PP film materials