Beijing Orient Agribusiness Consultant Limited Sept. 02, 1999

Beijing Orient Agribusiness Consultant Limited Sept. 02, 1999

Thursday Nov. 25, 2004

Volume Fertilizer, Issue 20041125

Inside This Issue

News Briefs

Fertilizer Policy for Spring Plowing in 2005

Fertilizer Imports & Exports in Oct.

Phosphorite Exports in Oct.

Sulfur Imports in Oct.

Producer’s Prices

Inventories and Prices at Ports

Price Trends

CHINA FERTILIZER

Weekly Market Report

RM. 301~303, North Office Area, Ministry of Agriculture, No. 16 Maizidian Jie, Chaoyang District, Beijing, 100027, China

Telephone: 86-10-6419-5216, 86-10-6419-5218Fax: 86-10-6419-5217 E-mail:

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Nov. 25, 2004

News Briefs

 15,351 shares of Qinghai Salt Lake Industrial Group Co. Ltd., 20% of the total have been recently transferred from the company to Sinochem Group. The former still holds 25,404 shares, 33.1% of the total shares.

 Xinjiang has recently reached an agreement with the State Development & Investment Corp. to develop an annual potassium productive capacity of 3 million MT in Lop Nor, Xinjiang, with $970 million investment, turning the place into China’s largest potassium sulfate production base.

 Sinochem and Chongqing Huayi Holding Group Corp. (in Chongqing) are to jointly invest $680 million to set up a 1.4 MT/year fertilizer production line.

 In the trade negotiations with China Farm Supply Group, Russian IPC asks for a $40/MT rise in the price of potassium chloride to be exported to China in 2005.

 Sinochem has ordered 2.1 million MT potassium chloride from Canpotex for delivery in 2005, 27% more than this year. They include 1.5 million MT red product, 300,000 MT white product and 300,000 MT granule product, to be supplied at prices higher than this year by $40/MT, $43/MT and $50/MT respectively (FOB).

Fertilizer Policy for Spring Plowing in 2005

To ensure fertilizer supply during spring plowing in 2005 and protect farmers’ interests, the State Development Commission, the Ministry of Agriculture and three other ministries jointly issued a notice on Nov. 19 to the following effect:

First, the favorable policies to fertilizer production and distribution are to be sustained in 2005. The preferential power rate and railways transport rate will continue for fertilizer production and shipment. Urea producers will continue to enjoy a 50% VAT refund. The provincial and municipal governments are required to ensure the supply of coal, electricity, oil and natural gas to fertilizer plants.

Secondly, for large nitrogen plants, the producer’s price is still subject to a tight control. From Dec. 1 of 2004 on, urea producer’s price is raised from $169/MT (set in 1998) to $181/MT allowing a 10% upward drift but no limit in downward drift, to make up for the increased production cost.

Thirdly, the suspension of tax refund for urea and DAP exports continues in 2005 to curb exports. Non-refund is also applied to fertilizer export contracts signed prior to march of 2004 but prices were not settled.

Fourthly, the government is to establish a commercial fertilizer reserve system for the weak season of consumption in line with the principle of interest-free loans to producers who practice the reserve. The state-run farm material suppliers are required to purchase fertilizer from producers.

Fifthly, the government will intensify market regulation by means of controlling price difference between purchase and supply and between wholesaling and retailing.

Fertilizer Imports & Exports in Oct.

According to the customs, China’s fertilizer imports registered 810,000 MT (product, same below) in Oct., down 5.8% from the month before but up 6.2% on the year-on-year basis.

Urea imports were 8,197 MT in Oct. and 31,900 MT during Jan. ~ Oct. DAP imports were 1.953 million MT during Jan. ~ Oct., down 9.5% on the year-on-year basis. NPK imports were 178,000 MT in Oct., up 6.97% over the month before but down 0.85% on the year-on-year basis. NPK imports totaled 1.6308 million MT during Jan. ~ Oct., down 16.1% on the year-on-year basis. In the first ten months of this year, urea, DAP and NPK import quotas were fulfilled by 1.39%, 31.25% and 52.1% respectively.

MOP imports recorded 611,700 MT in Oct. and SOP 9,843 MT, up 9% but down 35.9% respectively against the month before; up 38.4% but down 64.7% respectively on the year-on-year basis. In the first ten months of this year, MOP and SOP imports were 6.086 million MT and 129,800 MT, up 12.8% but down 57.7% respectively on the year-on-year basis.

In terms of exports, urea and DAP recorded 525,000 MT and 56,900 MT in Oct., up 160,000 MT but down 24,000 MT respectively against the month before; down 108,000 MT and 33,000 MT respectively from the same period of last year. In the first ten months of this year, urea exports totaled 2.61 million MT and DAP 716,000 MT, up 53.5% and 22% respectively on the year-on-year basis. NPK exports were 6,836 MT in Oct. and 131,000 MT during Jan. ~ Oct.

Phosphorite Exports in Oct.

According to the customs, phosphorite exports were 340,800 MT in Oct., up 17.6% over the month before but down 8% on the year-on-year basis. In the first ten months of this year, 2.476 million MT were exported, a slip of 11.1% on the year-on-year basis.

In the off-season of phosphorus production at home in winter, mines hope to increase phosphorite exports, but export volume is under the government control policy. BOABC predicts that monthly exports may average 200,000~250,000 MT in Nov. and Dec. Total exports in 2004 are estimated to be 3 million MT, 11% less than last year.

Table1, China’s Unground Phosphorite Exports by Destination Country, 2004

Unit: MT, US$/MT

Table2, China’s Unground Phosphorite Exports by Customs, 2004

Unit: MT

Table3, China’s Ground Phosphorite Exports by Destination Country, 2004

Unit: MT, US$/MT

Table4, China’s Ground Phosphorite Exports by Customs, 2004

Unit: MT

Sulfur Imports in Oct.

According to the customs, sulfur imports recorded 486,900 MT in Oct., down 29.9% from the month before but up 27.7% on the year-on-year basis. total imports during Jan. ~ Oct. were 5.466 million MT, a growth of 32.2% on the year-on-year basis.

Imports are presumed to slow down in the weak season of fertilizer production in winter. Total imports in 2004 may reach 6.3 million MT, an increase of 20~26% on the year-on-year basis.

Table5, China’s Sulfur Imports by Origin Country, 2004

Unit: MT, US$/MT

Notes: Sulphur of all kinds, other than sublimed sulphur, precipitated sulphur and colloidal sulphur.

Table6, China’s Sulfur Imports by Customs, 2004

Unit: MT

Notes: Sulphur of all kinds, other than sublimed sulphur, precipitated sulphur and colloidal sulphur.

Table7, China’s Sulfur Imports by Origin Country, 2004

Unit: MT, US$/MT

Notes: Sulphur, sublimed or precipitated sulphur; colloidal sulphur.

Table8, China’s Sulfur Imports by Origin Country, 2004

Unit: MT, US$/MT

Notes: Sulphur, sublimed or precipitated sulphur; colloidal sulphur.

Producer’s Prices

TableⅠ, China Fertilizer Producer’s Prices, 2004

Unit: US$/MT

TableⅡ, China Urea Producer’s Prices by Area, 2004

Unit: US$/MT

Inventories and Prices at Ports

TableⅢ, China Imported DAP Inventories at Ports, 2004

Unit: 000MT

TableⅣ, China Imported MOP Inventories at Ports, 2004

Unit: 000MT

TableⅤ, China Imported SOP Inventories and Prices at Ports, 2004

Unit: US$/MT, 000MT

TableⅥ, China Imported NPK Inventories and Prices at Ports, 2004

Unit: US$/MT, 000MT

Price Trends

Urea: This week the urea retail prices were basically steady, but influenced by the domestic coal prices rose greatly and lack of the natural gas supply, the international urea price fell slightly, the new policy of price restriction and the exporting policy by government also came on step by step, but BOABC think the urea prices are foreseen to be stable at high level in the near future (Figure 1).

ABC: The ABC retail prices were similar as last week, the ABC retail prices are anticipated to be stable in the near future (Figure 2).

DAP: This week the DAP prices out of factory and DAP retail prices rose slightly due to the imported DAP price rose, the prices are foreseen to be stable in the near future (Figure 3).

SSP: the SSP retail prices continued to be stable, and it is foreseen to continue to be stable in the near future (Figure 4).

MOP: the average MOP retail price continued to be stable with slight rise, influenced by a rumor that the international potash suppliers asked Chinese to improve US$40/MT, the domestic MOP price is expected to continue to be at a high level in the near future (Figure 5).

SOP: this week the SOP retail price rose slightly from last week, MOP price continued to rise and the imports and the domestic output both fell, the SOP price is foreseen to continue to rise in the near future (Figure 6).

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