Weak Vietnam sales hit South Korea NPKs: Correction

Corrects PVFCC to PVCFC in 3rd sentence of para 4 and Vinachem to Vinacam in 4th sentence of para 4.

A combination of stricter import regulations and growing domestic NPK production in Vietnam have driven down demand for South Korean NPK exports.

South Korea's NPK exports to Vietnam stood at 6,600t in September, down by 56.2pc on the year while NPK exports from South Korea to Vietnam for the January to September period totalled 47,356t, down by 50pc, according to GTIS data.

The Vietnamese government introduced new fertilizer import regulations in September 2017 to protect the growing domestic industry. These regulations called for new market entrants to secure import permits and for testing on new products and NPK grades that have been changed. The changes were believed to have been implemented to safeguard against a potential surge in Chinese exports, but they have also led to delays and difficulties for long term exporters like South Korea.

New production capacity coming on stream in Vietnam to supply the domestic market is likely to have added to the decline in import demand. The 250,000 t/yr NPK unit operated by PetroVietnam Fertilizer and Chemicals Corporation (PVFCC) in Phu My started up in July and is running at 80pc capacity. This will be followed by the PetroVietnam Camau Fertilizer (PVCFC) operated plant in Ca Mau with steam granulation capacity of 250,000-300,000 t/yr by the end of 2018. Vietnamese state-owned Vinacam (Vietnam National Chemical) started its new 100,000 t/yr steam granulation/bulk blending facility in Long An late last year, while Korea-Vietnam Fertilizer (KVF) started up its 360,000t/yr steam-granulation NPK unit in Ho Chi Minh in December 2017.

Overall NPK demand in Vietnam is estimated to be around 4mn t/yr.

South Korea's NPK exports totalled 18,281t in September, down by 28.4pc on the year owing to the decline in shipments to Vietnam. But exports to Myanmar have increased in the same month to 6,087t, more than five times the volume shipped to Myanmar in the same month last year.

NPK exports from South Korea for the first nine months of the year stood at 176,362t, down by 15pc on the year, also dragged down by lower export volumes to Vietnam. Exports to Japan in the same period increased by 22.7pc to 37,620t, while exports to Myanmar more than doubled to 23,637t.

While NPK exports by South Korea have softened, its exports of NPs have remained relatively steady at 288,506t in the first nine months of the year, little changed from the 290,253t recorded in the same period last year. Thailand remains the main recipient of South Korea's NPs exports, receiving 275,120t of the volumes exported by South Korea between January and September this year.