China VAT cut unlikely to affect fertilizers long term
China's cut in its value-added tax (VAT) is unlikely to have a substantial impact on fertilizer and raw material trade or pricing in the long term.
China will cut its VAT rate from 16pc to 13pc for most industries and from 10pc to 9pc for some other sectors, including transport and construction, Chinese premier Li Keqiang told the national people's congress in Beijing yesterday. No date was announced but it is expected to start on 1 May as last year. China's central government last year cut the VAT to 16pc on fertilizer raw materials and 10pc on finished fertilizers from 17pc and 11pc respectively.
The VAT for fertilizer raw materials such as ammonia, phosphate rock and sulphur is now expected to fall to 13pc, with finished fertilizer such as urea, DAP and NPKs dropping to 9pc.
The reduced tax burden could see finished fertilizer and raw material prices rises, some market participants said, but no substantial increase is expected from the modest tax cut.
There have been initial drops in domestic sulphur prices, which fell a modest 10 yuan/t ($1.50/t) after the announcement. But this is seen as more of an immediate reaction and not the start of a trend.
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Yara first-quarter gas consumption higher on year
Yara first-quarter gas consumption higher on year
London, 29 April (Argus) — Europe's largest fertiliser producer Yara's European gas consumption in the first quarter was up by 26pc on the year, but remained far lower than in the second half of last year. Norway-based Yara's gas consumption across Europe in January-March totalled 29.2 trillion Btu, well above the 23.1 trillion Btu a year earlier, but drastically down from 37.5 trillion Btu in the fourth quarter last year, the company's latest quarterly report shows. Yara did not report its European ammonia production for the first quarter, but the company's global output totalled 1.74mn t, up from 1.38mn t a year earlier. Yara's first-quarter European gas consumption fell from the preceding three months, despite its average European gas costs falling to $11.70/mn Btu from $13/mn Btu. The firm's European gas costs have declined sharply since peaking at $34.50/mn Btu in the third-quarter 2022, when European wholesale prices hit all-time highs ( see price graph ). Yara's quarterly spending on European gas supplies fell to $343mn in January-March, the lowest since at least summer 2021 when the company began reporting this data, and around one third the $1.08bn peak in April-June 2022. Yara's European gas consumption also fell despite a 37pc annual increase in total fertiliser deliveries in Europe . Lower curtailments, improved production economics and "volume catch-up" had supported output, Yara said. But while European deliveries improved on the year, they remained "below normal" — particularly for nitrates — and Yara sourced a larger share of its European deliveries from its global plants, the company's chief financial officer Thor Giaever said. Yara had hinted earlier this year its ammonia assets might run at 90pc or more of capacity as the company expected to boost production this year . But one explanation for the lower gas demand compared to the previous quarter is Yara may be maximising production at more efficient plants like Sluiskil in the Netherlands and Brunsbuttel in Germany, while ramping down less efficient plants, allowing the company to maintain or increase production while consuming less gas. Yara last year curtailed 19pc of its European ammonia capacity , turning towards greater imports of ammonia to replace the lower production. And that remains key to Yara's business plans , which the company said last week focused on "further strengthening operational resilience and flexibility". Argus assessed European ammonia production prices based on the TTF front-month price at roughly a $100/t discount to northwest European import prices in its last weekly assessment on 25 April, suggesting a still-significant financial incentive to produce ammonia domestically. The European fertiliser market remains under pressure by large volumes from Russia, meaning Europe has swapped an energy dependency on Russia for a food dependency, chief executive Svein Tore Holsether said, echoing previous statements . Comparing global assets Yara consumed 54.4 trillion Btu of gas globally in January-March, down from a multi-year high of 61.9 trillion Btu in October-December ( see consumption graph ). European consumption accounted for roughly 54pc of Yara's global gas demand in January-March, well down from 61pc in the previous quarter. And Yara spent $485mn on gas worldwide in January-March, 71pc for European supply, a lower proportion than at any other point since 2021. Yara's global average gas cost was $8.90/mn Btu in January-March, 24pc below its reported European cost. That discount has been a significant driver for Yara and others to increase production abroad rather than in Europe over the past two years. Yara forecasts its European gas costs at $9.70/mn Btu and $10.50/mn Btu in the second and third quarters of this year, respectively, holding well above its global average gas costs of $7.70/mn Btu and $8.40/mn Btu during those same periods. Globally, the firm aims to produce 8.6mn t of ammonia in 2025, significantly up from 7.8mn t in 2023, it said. By Brendan A'Hearn Yara European vs global gas costs $/MMBtu Yara European vs global gas consumption million MMBtu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's RCF seeks 100,000t of NPS
India's RCF seeks 100,000t of NPS
London, 29 April (Argus) — Indian fertilizer importer RCF has issued a tender to buy two 50,000t lots of 20-20-0+13S. RCF requests delivery of the first lot by 10 June and the second by 20 June. The tender is to close on 3 May, and offers must be valid until 7 May. The tender is open only to suppliers with which RCF has signed long-term agreements. RCF in February bought just over 30,000t of Saudi Arabian 20-20-0+13S from a trading firm at around $359/t cfr duty unpaid, equating to $377/t cfr duty paid/free. The Argus assessment for Indian imports of the grade has remained broadly flat since, largely because of a lack of trade. Indian importers have been buying mainly NPK grades — particularly Russian-produced 10-26-26 — while high stocks have helped to ensure little NPS activity. But the nutrient-based subsidy (NBS) for 20-20-0+13S being raised by just 11pc season on season , compared with 19pc for 10-26-26 and 20pc for 12-32-16, has also helped to nudge demand towards the latter products. By David Maher Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
India's Fact issues tender to buy 15-15-15
India's Fact issues tender to buy 15-15-15
London, 29 April (Argus) — Indian fertilizer producer and importer Fact has issued a tender to buy two 20,000-30,000t lots, plus or minus 10pc, of 15-15-15 product. The tender closes on 13 May at 14:30 Indian Standard Time (IST). The first shipment should be delivered to the port of New Mangalore before 20 June, and the second to Tuticorin during 1-15 July. If suppliers cannot meet these timelines, they can offer to the nearest available date, and these submissions will be considered in the absence of offers that match Fact's desired dates. Offers can be made for either shipment or both. By David Maher Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
STB chair Oberman to leave rail agency on 10 May
STB chair Oberman to leave rail agency on 10 May
Washington, 26 April (Argus) — US Surface Transportation Board (STB) chairman Martin Oberman (D) said today that he would retire in two weeks, though a replacement has not been named. Oberman informed President Joe Biden of his decision in a letter earlier today. Oberman said in mid-November 2023 that he would exit the agency in early 2024 . His five-year term expired on 31 December but he continued to serve into his one-year holdover term. No additional details have been announced, but vice chairman Karen Hedlund (D) is expected to lead the rail regulator until a formal appointment has been made. Chairman Oberman's "commitment to exploring all sides of an issue was pivotal in helping to find solutions for stakeholders," the Freight Rail Customer Alliance said. National Grain and Feed Association chief executive Mike Seyfert said pointed to Oberman's actions in working toward significant regulatory milestones for agricultural shippers and railroads. Under Oberman's leadership, STB has moved forward on long-standing proposal to allow reciprocal switching. The switching plan would allow a shipper served by a single railroad to request that its freight be transferred to another major railroad at a designated interchange point. STB is expected to act on reciprocal switching as early as this month, after introducing a plan tied to railroad service performance in September 2023. His term was also highlighted by several major industry events, such as the Covid-19 pandemic, the merger of Canadian Pacific and Kansas City Southern and the 2022 rail service crisis. Oberman was nominated by former US president Donald Trump in July 2018. His appointment was confirmed by the US Senate in January 2019 and he was appointed chairman by President Joe Biden in January 2021. By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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