CHINA is clamping down on聽fertilizer exports to protect its domestic market, a number of industry sources said, putting an additional strain on global markets that were already grappling with shortages caused by the US-Israeli聽war on Iran.
China is among the largest聽fertilizer exporters – shipping more than $13 billion worth of it last year – and it has a history of controlling聽exports to keep prices low for farmers.
Shipments through the聽war-blocked Strait of Hormuz account for roughly one-third of the sea-borne supply. In mid-March, Beijing banned聽exports of nitrogen-potassium聽fertilizer blends and certain phosphate varieties, sources told Reuters.
The ban, which has not been formally unveiled, was reported earlier this week by Bloomberg News.
Added to existing bans and export quotas for urea, only a handful of聽fertilizers – notably ammonium sulphate – can be exported, five sources said. That would mean between half and three quarters of聽China鈥檚聽exports last year are restricted, potentially up to 40 million metric tons, according to a Reuters estimate.
鈥淭his pattern is consistent:聽China restricts supplies rather than coming to the rescue during global tightness,鈥 said Matthew Biggin, a senior commodities analyst at BMI.
鈥淭he export restrictions exist because of their tight domestic balance – they鈥檙e prioritizing food security and insulating their domestic market from price shocks.鈥
Beijing鈥檚 curbs, like its move last week to ban refined fuel exports, come as governments limit聽exports of products whose inputs have been threatened by disruption from the聽war, worsening shortages and higher prices around the world.
International urea prices have risen by around 40% from pre-war levels. In聽China, urea futures are near a 10-month high.
DEPENDENT ON聽CHINA
Fertilizers are essential for plant growth and crop yields. Higher prices could lead to reduced usage, or farmers could switch to crops that require less聽fertilizer.
Last year,聽China sent Brazil, Indonesia, and Thailand roughly a fifth of their聽fertilizer imports and that figure stood at a third for Malaysia and New Zealand, according to International Trade Centre data. For India, it was around 16%, according to its trade data.
Between half and 80% of those聽exports are now restricted, according to a Reuters analysis of Chinese customs data.
鈥淏uyers were hoping聽China would step in and fill the聽supply gap, but this decision will only tighten supplies聽further,鈥 a New Delhi-based聽fertilizer company official said, in reference to the recent restrictions.
The company official declined to be named due to the sensitivity of the matter.
India, which imported more than 40% of its urea, a nitrogen-based聽fertilizer, and DAP, a blend, from the Middle East last year, has requested China issue export quotas for urea.
WHEN WILL聽EXPORTS RESUME?
The Philippines on Wednesday said聽China had assured it that聽fertilizer exports would not be restricted.
Asked about the comments a day later,聽China鈥檚 Ministry of Foreign Affairs spokesperson referred the question to other departments.
China鈥檚 General Administration of Customs, National Development and Reform Commission and Ministry of Commerce did not immediately respond to requests for comment.
At a聽fertilizer conference in Shanghai attended by Reuters on Wednesday, five salespeople said they did not expect the聽fertilizer bans to be lifted before August, after聽China鈥檚 peak June-to-August export period.
Producers are watching for signals from the government after spring planting to see whether bans would be extended.
In December, the state-linked fertilizer association urged major producers to suspend聽exports of phosphate聽fertilizers until August.
鈥淢ost folks who follow this very, very closely are expecting them to continue to extend the export bans,鈥 said聽Caitlin Welsh, a director at the Center for Strategic and International Studies.
鈥淐hina is so reluctant to do anything that would increase the price of grains, especially animal feed, domestically.鈥 鈥 Reuters
