Asia's fertilizer buyers seek options amid China's export curbs

December 18, 2023 (MLN): Asian fertiliser buyers are seeking alternatives to Chinese supplies on concerns the world's top exporter has become an increasingly unreliable supplier after curbs on shipments to protect its domestic market, as Reuters reported.

China is the world's biggest exporter of phosphate and a major supplier of urea, but since 2021 it has imposed measures including export quotas and lengthy inspection requirements on the fertiliser ingredients to cool domestic prices, it added.

Urea exports plunged 24% to 2.8 million metric tons in 2022 from the year before and though higher this year, remain below the previous years' average level.

Phosphate exports were brisk earlier in the year but have also been throttled back in recent months, leading to a squeeze in global supply that has pushed up prices.

The Chinese government's growing intervention in the exports means the country will be an even less reliable supplier in 2024, said Josh Linville, director of fertiliser at brokerage StoneX Group Inc.

"Normally, market factors call the shots on what happens. Now, we have to try and figure out what the central government is thinking and its reaction can swing heavily from side to side. Buyers will have to diversify," he said.

U.S prices for di-ammonium phosphate (DAP), a global benchmark for the industry, have risen 26 per cent since mid-July to $617.30 per ton, according to LSEG data.

"The limitations imposed by China are pushing up urea and di-ammonium phosphate prices, but we don't anticipate significant increases," said a senior official with a New Delhi-based fertiliser company.

India is one of the world's top fertiliser buyers. Chinese urea exports to the country in the first half of the 2023/24 year starting in April plunged 58 per cent from a year ago to 335,963 tons, according to data compiled by India's trade ministry.

However, readily available product from alternative suppliers including Russia, Oman, and the United Arab Emirates are offsetting the lower shipments from China, added the official.

Malaysian buyers are also switching away from China, buying up phosphate from Vietnam and Egypt, said Teo Tee Seng, managing director of fertilizer and agrochemicals supplier Behn Meyer Agricare in Kuala Lumpur.

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