On December 24, 2007, the State General Administration of Customs issued Announcement No. 74, which introduced seasonal adjustments to export tariff rates for most chemical fertilizers and their raw materials. This move aimed to control the export of energy-intensive and polluting products while ensuring domestic supply and stabilizing fertilizer prices.
Under the new regulations, urea would face a provisional export tariff of 30% from January 1 to March 31, 2008, and a tentative rate of 35% from April 1 to September 30. For diammonium phosphate (DAP) and related mixtures, the provisional tariff was set at 20% during the first half of the year, rising to 30% in the second half. Sulfuric acid and fuming sulfuric acid were subject to a 5% provisional export tariff.
Industry responses to the policy varied. While some companies anticipated a short-term decline in exports due to higher costs, many believed that long-term export enthusiasm would remain strong. Yang Jiancheng, deputy general manager of Wulashan Chemical Group, noted that although the fourth-quarter tariff increased by 10%, China’s urea prices remained competitive globally. With international FOB prices around $380–$390 per ton and domestic prices at about 1,840 yuan, exports still had room to grow. Additionally, rising global oil prices were expected to sustain high international urea prices, further supporting Chinese exports.
Tang Liyong of Sichuan Meifeng Agricultural Chemicals highlighted that the surge in international fertilizer prices had already driven significant export growth. From January to November 2007, urea exports reached 3.735 million tons, with an estimated annual total exceeding 4 million tons. Diammonium phosphate exports also saw a sharp rise, reaching 1.8 million tons in the same period, with expectations of surpassing 2 million tons for the year.
Wang Qixuan of Yantai Zhongde Group pointed out that despite the new tariffs, export prices for DAP had increased. Before the announcement, DAP was priced at $500–$530 FOB, but now it had risen to $550. This indicated that part of the tariff burden was being passed on to international buyers, maintaining export momentum.
Jiang Jitao of Shandong Luxi Chemical warned that sulfur and synthetic ammonia prices had surged, putting pressure on phosphate fertilizer production. With international ammonia prices hitting record highs, DAP export quotes were expected to reach $580–$600 per ton. He predicted that both urea and phosphate fertilizer prices would remain elevated in the coming spring, driven by rising input costs.
Despite the tariff hikes, most companies believed that if international prices remained higher than domestic prices plus the export duty, exports would continue. The close integration between domestic and global markets meant that economic incentives would still drive trade flows. In summary, while the policy aimed to stabilize the domestic market, its long-term impact on exports remained limited due to strong international demand and competitive pricing.
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