FocusChina DAP market weakens on exports blockage from June-Sept

27 June 2011 10:22  [Source: ICIS news]

By Jody Pond and Amanda Zhang

The governmentSHANGHAI (ICIS)--Prices of di-ammonium phosphate in China started to fall, with likelihood of continued weakness throughout the third quarter, as producers will be saddled with high inventory on a regulation that effectively bans exports, market sources said on Monday.

Producers have lowered their offers to the domestic Chinese market for 64% DAP to CNY3,150-3,400/tonne ($486.8-525.5/tonne) ex-works on Monday from CNY3,250-3,400/tonne ex-works last week, market sources said.

China
’s biggest DAP producer, Yunnan Yuntianhua International Chemical, offered CNY3,150-3,200/tonne ex-works for its July contracts, down CNY50/tonne ($8/tonne) from June, a company source said.

Yunnan Yuntianhua produced 4m tonnes of DAP last year, according to data from Chemease.

China
implemented an effective blockage on DAP exports, aimed at protecting the country’s limited phosphate resources. Phosphate rock is the feedstock for DAP production.

The DAP exports price cap on which a 7% tariff applies was cut to CNY3,400/tonne starting this month through September, from CNY4,000/tonne in 2010. Beyond CNY3,400/tonne, higher taxes will be charged on DAP exports, prompting Chinese producers to forego overseas sales, market sources said.

China's export prices for DAP are lower compared to other regions, according to ICIS data. (Please see table below)

The regulation is expected to whittle down China’s DAP exports by half to 2m tonnes this year from 3.98m tonnes in 2010, according to Chemease, an ICIS service in China.

China
produced a total of 23.3m tonnes of combined mono-ammonium phosphate (MAP) and DAP last year, data from Chemease showed.

China and other countries

($1 = CNY6.47)

Please visit the complete ICIS plants and projects database
Read John Richardson and Malini Hariharan’s blog – Asian Chemical Connections


By: Amanda Zhang
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