PCS predicts more consistent China urea exports

Spanish Market: Fertilizers
20/06/14

PotashCorp (PCS) expects China's 2014 urea exports to increase and show less quarter-to-quarter variability because of the new export tax policy, according to the company's quarterly market update.

China has led the world in urea exports for the last two years, shipping a record 8.3mn t in 2013, according to customs data, solidly above the previous high of 7mn t in 2011. The country managed these sales abroad despite a tax policy that made exports of product not in bonded warehouses uneconomical for all but four months of the year.

With the 1 November-30 June export tax rate around 110pc until 2014, China's urea exports usually followed a similar quarterly pattern. Shipments would peak in the third quarter or fourth quarter, and then gradually fall into the second quarter as bonded warehouse stocks were depleted.

PCS expects that cadence to change this year as the new export tax policy levies only an additional 15pc for exports from 1 November-30 June. The company forecasts 2014's second quarter, third quarter, and fourth quarter exports at about 2.5mn t (up 407pc year-over-year), 3.1mn t (down 27pc year-over-year) and 2.2mn t (down 19pc year-over-year), respectively. These estimates suggest a far more consistent pace of quarterly exports versus the historical pattern.

China's first quarter 2014 urea imports more than doubled to nearly 2mn t as exporters took advantage of the new tax policy.

PCS' forecast implies total 2014 exports of about 9.7mn t, up 17pc from 2013 levels. Despite higher exports for the year, lower shipments in the third and fourth quarter could help keep prices firm in the fall.

Since the implementation of the new export tax policy, Chinese prilled urea export prices have declined from $335/st fob the first week in January to about $260/t fob this week. The decline may have more to do with typical seasonal price movement than the new export tax policy, but some members of China's fertilizer industry blame traders and lack of discipline on the part of producers.

Last week's Indian urea purchase tender received its lowest offer from Aries at a netback around $250/t fob China. This prompted the China Nitrogen Fertilizer Industry Association (CNFIA) to issue a statement calling for collective action from Chinese urea producers to help stem price declines.

CNFIA instructed producers to not supply cargoes to traders who have committed to prices below the market. It also asked producers to coordinate with distributors to sell product domestically, stop shipping to ports to control export inventory, and organize turnarounds to match production to demand.

Were this coordinated effort to materialize, PCS' 9.7mn t forecast could prove too high. For now, there has been little evidence of a supply response from Chinese producers.

me/dcb

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US-Belarus potash trade may soften MOP pricing outlook

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Without access to the US and EU markets, Belarus has leaned heavily on markets such as Brazil, China and southeast Asia, often pricing aggressively to maintain market share. The reopening of US trade offers a chance to reduce dependence on these regions. The lifting of the sanctions will also make it significantly easier for companies to trade Belarusian potash around the world, except in the EU and the UK, where sanctions remain on Belarus. Importers that had previously stopped taking Belarusian MOP may now be open to trading with Belarus again. By having an additional supply option, buyers may find they have a stronger negotiating position with existing suppliers, which could put downward pressure on prices. Conversely, markets where Belarus has a strong presence could see a reduction of Belarusian volumes if product shifts toward the US, potentially making those regions less competitive. The policy change also comes at a time when Belarusian MOP capacity is increasing capacity, with the 2mn t/yr Nezhinsky MOP project scheduled for commissioning in the second quarter of 2026, and underscores Belarus' commitment to continue growing its footprint in the global potash market. By Julia Campbell and Taylor Zavala Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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PCS predicts more consistent China urea exports

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