China to face DAP fertilizer shortfall in 2008

21 November 2007 16:51  [Source: ICIS news]

LONDON (ICIS news)--China could witness a diammonium phosphate (DAP) fertilizer shortfall of 1.5m tonnes for the coming spring season, a major Chinese producer said on Wednesday.

 

The news bolstered the government’s case for restricting DAP exports in 2008, although an official announcement on the level of export duty effective 1 January on DAP (and monammonium phosphate (MAP) and triple super phosphate (TSP) was not expected until 10 December.

 

In this environment, Chinese exporters were adopting a wait-and-see approach before committing to further exports, the producer said. 

 

China exported over 1.4m tonnes of DAP in the first nine months of 2007, compared with just 524,000 tonnes in the same period of 2006 and 485,000 tonnes in 2005.

 

Tight supply globally has fuelled demand for Chinese DAP and MAP.

 

Chinese producers have enjoyed record high prices for DAP as a result, with levels rising from $290/tonne (€197/tonne) FOB (free on board) at the beginning of the year to $470-480/tonne. 

 

Despite the shortage, the chances of US exports to China resuming in 2008 (having ceased earlier in 2007) appeared remote, according to a US source.

 

As well as the political ramifications of reversing a policy of nominal self-sufficiency in DAP, Chinese buyers would be reluctant to pay current international market prices.

 

The source said it was more likely that China would run down stocks considerably and reign in exports rather than import product.

 

($1 = €0.68)

By: Mike Nash
+44 20 8652 3214

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