© Reuters. A employee sporting a face masks transports fertilisers for export at a port in Nantong, Jiangsu province, China January 31, 2020. China Day by day through REUTERS/file photograph
By Mei Mei Chu and Rajendra Jadhav
BEIJING/MUMBAI (Reuters) – Asian fertiliser patrons are looking for alternate options to Chinese language provides on considerations the world’s prime exporter has turn into an more and more unreliable provider after curbs on shipments to guard its home market, patrons and analysts stated.
China is the world’s greatest exporter of phosphate and a significant provider of urea, however since 2021 it has imposed measures together with export quotas and prolonged inspection necessities on the fertiliser substances to chill home costs.
Urea exports plunged 24% to 2.8 million metric tons in 2022 from the 12 months earlier than and although larger this 12 months, stay beneath the earlier years’ common degree.
Phosphate exports had been brisk earlier within the 12 months however have additionally been throttled again in latest months, resulting in a squeeze in world provide that has pushed up costs.
The Chinese language authorities’s rising intervention within the exports means the nation might be a fair much less dependable provider in 2024, stated Josh Linville, director of fertiliser at brokerage StoneX Group Inc.
“Normally, market factors call the shots on what happens. Now, we have to try and figure out what the central government is thinking and its reaction can swing heavily from side to side. Buyers will have to diversify,” he stated.
U.S costs for di-ammonium phosphate (DAP), a world benchmark for the trade, have risen 26% since mid-July to $617.30 per ton, in response to LSEG information.
“The limitations imposed by China are pushing up urea and di-ammonium phosphate prices, but we don’t anticipate significant increases,” stated a senior official with a New Delhi-based fertiliser firm.
India is likely one of the world’s prime fertiliser patrons. Chinese language urea exports to the nation within the first half of the 2023/24 12 months beginning in April plunged 58% from a 12 months in the past to 335,963 tons, in response to information compiled by India’s commerce ministry.
Nonetheless, available product from different suppliers together with Russia, Oman, and the United Arab Emirates are offsetting the decrease shipments from China, added the official.
MARKET IN LIMBO
Malaysian patrons are additionally switching away from China, shopping for up phosphate from Vietnam and Egypt, stated Teo Tee Seng, managing director of fertilizer and agrochemicals provider Behn Meyer Agricare in Kuala Lumpur.
“The global market has been in limbo due to China’s export restrictions,” he stated.
China’s DAP and mono-ammonium phosphate (MAP) gross sales have slowed in latest months amid declining home manufacturing, stated merchants and analysts.
In October exports of DAP dropped by 12.5% from a 12 months earlier whereas MAP exports had been down 10%, Chinese language customs information exhibits.
“Our normal supplier has reduced their packing size to 8 kilogrammes now, it used to be 25 kilogrammes,” stated Malaysian importer Ng Wei Houng.
South Korea, which has complained to China over delays in urea exports, can also be searching for alternate options. It makes use of urea each as a fertiliser and as a diesel gas additive.
“We are diversifying to receive imports from countries like Vietnam, Indonesia and Saudi Arabia and will continue this trend going forward,” stated an official from a significant South Korean urea distributor, who declined to be recognized as he was not authorised to talk to media.
Seoul expanded its urea reserve to guard in opposition to the rising volatility, securing extra provides from Vietnam, the federal government stated this month.
Urea exports from China subsequent 12 months are anticipated to extend incrementally from 2023 to round 4 million tons, analysts stated, however shipments will stay tight into the primary half of the 12 months.
China has requested 15 main fertiliser buying and selling companies to restrict their whole exports in 2024 to 944,000 metric tons, and is predicted to problem quotas to different producers, stated Gavin Ju, principal fertiliser analyst at CRU Group.
China’s Nationwide Growth and Reform Fee didn’t reply to a request for touch upon its quota allocations.
