Chronicle for Chemical Fertilizers in 2009
Chronicle for Chemical Fertilizers in 2009
First, China started to practice market-oriented pricing system for the chemical fertilizer sector, effective January 25th, 2009. (CCR2009 No.2, No.4) Thereafter, the prices of domestically made fertilizers and imported fertilizers excluding imported potash fertilizer will be set by the market itself. The government canceled control over the trading prices. This reform brought a great impact on the chemical fertilizer industry and the agriculture.
Second, China's State Council released No.1 document of that year on February 1st, 2009 to promote and support the agriculture sector. The document stated that the government will increase subsidy to the agriculture, help chemical fertilizer manufacturing companies, strengthen control on materials used in the agriculture, increase the governmental off-season inventory for fertilizers and ensure sufficient supply. This document enhanced fertilizer makers' confidence.
Third, China's State Council approved the adjustment and stimulus program for the petroleum and chemical industry on February 19th, 2009 (CCR2009 No.7) and issued detailed items of the program on May 18th, 2009. The items related to fertilizers stated that the government will improve the supply capability of agrochemicals and adjust the industry layout of chemical fertilizer sector by cutting cost, controlling expansion and eliminating outdated capacity. The total fertilizer output is planned to reach 61.5 million tons (counting on pure nutrients) in 2011. To help implement of this program, China Petroleum and Chemical Industry Association issued on October 22nd a guidance suggestion (CCR2009 No.32) that the government will set stricter permits for entering the nitrogenous and phosphate fertilizers manufacture sector in order to control disorder expansion, the local government shall help farmers to apply fertilizers in line with the actual demand of land in order to increase the utilization rate of fertilizers and reduce abuse.
Given the increasingly voice of adjusting industrial structure and the worsening capacity expansions, the Ministry of Industry and Information Technology of China released on December 12th, 2009 that it plans to issue the 2009-2015 Developing Program for Chinese Chemical Fertilizer Industry to help this sector to develop healthily.
Fourth, the price of railway freight and electric power serving chemical fertilizers has been lifted in 2009. Thus the government eliminated the favor policies to fertilizer companies. Fertilizer makers, especially for the phosphate fertilizer makers those often transport fertilizers from south regions to north market, faced a higher cost in production and marketing.
Fifth, the State Council of China promulgated a notice on August 24th, 2009 that reformed the existed regulation on chemical fertilizer trade and opened up the trade to private firms. Hence, the trade of chemical fertilizers is no longer inclusive for state owned firms. The involved firms, in any ownership, who reach the regulated certifications in operational site and capital, can apply for the business permit in trading chemical fertilizers in domestic market.
Sixth, the government continued to execute special export tariffs for chemical fertilizers. On June 19th, the customs tariff committee of the State Council of China cancelled the special export tariffs (50% or 75%) on 27 items of products, including synthetic ammonia, phosphoric acid, ammonium chloride, triple superphosphate (TSP), sodium nitrate, and double nutrients compound fertilizers. The export tariffs for urea, mono-ammonium phosphate and di-ammonia phosphate are still 10% in off-season period and 110% in fast season. In December 2009 the government lowered the off-season tariffs to 7%. It can be seen that the government will insist on the strategy of ensuring domestic demand to be met in the fast seasons.
Seventh, China won a 1 million tons potash fertilizer imports contract from Russia on December 21st, 2009 at a contract price of US$350 per ton (CIF China). The price was lower than the US$565 per ton price in 2009 but still doubled that (US$165 per ton) in 2008. Affected by the high import price, China imported around 2 million tons of potash fertilizers in 2009, down 60%. It is predicted that the imports and domestic demand will increase in 2010.