South Korea's NPK and NP/NPS exports declined on the year in January-June, because of subdued demand from key export destinations.
Falling raw material values since the start of this year have pushed NPK prices down, causing most buyers to take a cautious approach in purchasing NPKs, buying only needed volumes instead of stocking up their inventories. The wide gap between buyer and seller price expectations has put pressure on South Korean suppliers, which are still using high-priced raw materials in their NPK production, leading to reduced exports.
South Korea exported a total of 105,900t of NPKs in January-June, down by 29pc on the year. Australia replaced the Philippines as the top export destination during this period, accounting for 25,500t, latest trade data show. Exports to the Philippines fell by 46pc on the year to 19,800t, while those to Vietnam decreased by 45pc on the year to 14,000t.
But shipments to Myanmar rose by 55pc on the year to 20,500t, supported by strong buying from importers that were stuck with high-priced urea inventories in the first half of this year and were unable to offload them into the domestic market. In comparison, domestic NPK prices were stable in the first half of this year, prompting Myanmar's importers to switch to importing NPKs instead of urea.
South Korea's NPK exports were at 29,800t in June, down by 37pc on the year, owing to reduced shipments to the Philippines. Exports to the Philippines more than halved on the year to 6,600t, whereas shipments to Myanmar accounted for 11,500t, up from 1,300t a year earlier.
NP/NPS exports fall
South Korea's NP/NPS exports fell by 3pc on the year to 156,100t, owing to a lack of shipments to India, which took 27,200t during the same period last year.
Thailand remained the top destination for South Korean NP/NPS exports, with 134,200t shipped, up by 20pc on the year. The main grade to Thailand is 16-20-0+13S, supplied to Thai importer Chia Tai. June NP/NPS exports fell by 12pc on the year to 31,600t, mainly because of a 14pc year on year fall in shipments to Thailand to 24,600t.
Demand headwinds persist in second-half 2023
With the likely onset of the El Nino phenomenon in southeast Asia in the second half of this year, bringing with it lower rainfall and hotter temperatures, agricultural activity is likely to take a hit, which will lead to reduced fertilizer demand in the region.
South Korean suppliers of complex fertilizers are likely to continue facing challenges in selling cargoes. This has pushed producers to look to alternative export destinations outside their main markets of southeast Asia. Some suppliers are already considering exporting to non-traditional destinations, such as Africa and Europe.
