China delays phosphate export duty hike 01 February 2008 04:35 [Source: ICIS news]
By Hong Chou Hui
SINGAPORE (ICIS news)--China’s plan to increase export duties on most phosphate fertilisers from the current 20% level is delayed as manpower resources are diverted to the more urgent problem of extreme weather, sources from the industry representative body said on Friday.
The necessary legislation has taken a back seat to the country’s effort to battle heavy snow ahead of Chinese New Year next week, and officials were busy with the snow relief effort, sources from the China Phosphate Fertiliser Industry Association, said in Mandarin.
With China experiencing its worst weather in over a decade, roads and railways in the country have been badly hit.
Hordes of factory workers trying to get home in time for the Chinese New Year festivities, which begins on 6 February, have worsened the situation. The government has mobilised the army and officials to help alleviate the problems generated by heavy snowfall in central and east China.
Representatives from the National Development and Reform Commission (NDRC) and the China Phosphate Fertiliser Industry Association met in Beijing last week and had promised to finalise and announce the final quantum of export duties on diammonium phosphate (DAP) fertiliser on Friday, said an industry source.
“China is still heavily dependent on agriculture. Without fertilisers, the farmers will face production difficulties,” said a Chinese trader in Mandarin.
“The production of DAP is energy intensive and produces a lot of pollutants so it’s all the more understandable that the Chinese government would want to ensure that it is retained for domestic use.”
The export duty for DAP was announced late last year to rein in outbound cargoes. The new policy kicked in with a 20% tax on DAP exports in the first quarter of 2008.
That, however, has failed to stem DAP cargoes from China heading overseas due to a $200/tonne (€134/tonne) price gap between export and domestic Chinese values.
The quantum of export taxes on DAP could be increased to as much as 35-45%, industry sources said.
The NDRC has yet to give an indication of when the export duties for Chinese DAP will be finalised and raised, said sources from the China Phosphate Fertiliser Industry Association.
(20min delay)