China is clamping down on fertilizer exports to protect its domestic market, industry sources said, putting an additional strain on global markets that were already grappling with shortages caused by the US-Israeli war on Iran.
China is among the largest fertilizer exporters — shipping more than US$13 billion of it last year — and it has a history of controlling exports to keep prices low for farmers. Shipments through the war-blocked Strait of Hormuz account for about one-third of the sea-borne supply.
This month, Beijing banned exports of nitrogen-potassium fertilizer blends and certain phosphate varieties, sources said.
Photo: Reuters
The ban, which has not been formally unveiled, was reported earlier this week.
Added to existing bans and export quotas for urea, only a handful of fertilizers — notably ammonium sulfate — can be exported, five sources said.
That would mean between half and three-quarters of China’s exports last year are restricted, potentially up to 40 million tonnes, according to an estimate.
“This pattern is consistent: China restricts supplies rather than coming to the rescue during global tightness,” BMI senior commodities analyst Matthew Biggin said. “The export restrictions exist because of their tight domestic balance — they’re prioritizing food security and insulating their domestic market from price shocks.”
Beijing’s curbs, like its move last week to ban refined fuel exports, come as governments limit exports of products whose inputs have been threatened by disruption from the war, worsening shortages and higher prices around the world.
International urea prices have risen by about 40 percent from pre-war levels. In China, urea futures are near a 10-month high.
Fertilizers are essential for plant growth and crop yields. Higher prices could lead to reduced usage, or farmers could switch to crops that require less fertilizer. Last year, China sent Brazil, Indonesia and Thailand about one-fifth of their fertilizer imports and that figure stood at one-third for Malaysia and New Zealand, according to International Trade Centre data.
For India, it was about 16 percent, according to its trade data.
Between half and 80 percent of those exports are now restricted, according to analysis of Chinese customs data.
“Buyers were hoping China would step in and fill the supply gap, but this decision will only tighten supplies further,” a New Delhi-based fertilizer company official said in reference to the restrictions.
The company official declined to be named due to the sensitivity of the matter.
India, which imported more than 40 percent of its urea, a nitrogen-based fertilizer, and DAP, a blend, from the Middle East last year, has requested China issue export quotas for urea.
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