On December 24, the State General Administration of Customs issued Announcement No. 74 in 2007, which introduced seasonal adjustments to export tariff rates for most chemical fertilizers and raw materials used in fertilizer production. This move aimed to regulate the export of high-energy-consuming and polluting products while ensuring domestic supply and stabilizing local prices.
For urea, a provisional export tariff of 30% was imposed from January 1 to March 31, 2008, and then increased to 35% from April 1 to September 30. For diammonium phosphate (DAP) and related blends, the tariff was set at 20% during the first half of the year and raised to 30% in the second half. Sulfuric acid and fuming sulfuric acid were subject to a 5% provisional export tariff.
Industry responses to these changes varied. While some companies expected a short-term decline in exports, many believed long-term export activity would remain strong due to competitive pricing. Yang Jiancheng, deputy general manager of Wulashan Chemical Group, noted that although the fourth-quarter tax rate rose by 10%, China’s urea remained cost-competitive globally. With international FOB prices hovering around $380–$390 per ton, and domestic prices at about 1,840 yuan, exports still had potential despite higher tariffs.
Tang Liyong, from Sichuan Meifeng Agricultural Chemicals, highlighted that rising global fertilizer prices had driven significant export growth. From January to November 2007, urea exports reached 3.735 million tons, with an estimated annual total exceeding 4 million. Diammonium phosphate exports also surged, reaching 1.8 million tons, with similar trends observed for monoammonium phosphate.
Wang Qixuan of Yantai Zhongde Group pointed out that despite higher tariffs, export prices for DAP had increased, with current quotes reaching up to $550 per ton. This indicated that companies were passing on some of the tariff burden to foreign buyers, maintaining export momentum.
Jiang Jitao of Shandong Luxi Chemical warned that rising sulfur and ammonia prices would push phosphate fertilizer costs higher. He predicted that DAP export prices could reach $580–$600 per ton, with domestic market tightness expected in the following spring.
Most companies acknowledged the intent behind the tariff adjustment but stressed that economic incentives would continue to drive exports if international prices remained favorable. As the global and domestic markets become more interconnected, firms are likely to keep exporting as long as it remains profitable.
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