China's Ministry of Finance announced export taxes for 2018 on December 15, imposing a new reduced rate on NPK exports from January 1, 2018. This will reduce costs for Chinese producers to enter the export market. Will these announced changes have an impact on future Chinese NPK exports?
China currently imposes an export tariff on NPK compound fertilizers, but this has steadily reduced over recent years following lobbying from Chinese NPK producers. The tax reduction will cut costs for producers to enter the export market. China has significant overcapacity in the NPK sector and a removal of export taxes could release some of this volume onto the international market, subsequently lowering international prices. This insight takes a closer look at the factors which will influence future NPK exports.
Tracking China's fertilizer export tariffs
Chinese export tariffs on urea and ammonia were removed completely by 2017, along with tariffs for DAP, MAP, and TSP. Meanwhile, tariffs for phosphate rock and NPK were cut to 15% and 20%, respectively. China's Ministry of Finance announced export taxes for 2018 on December 15. Export tariffs on urea and DAP remained unchanged at 0% and further reductions were made on phosphate rock and NPK. These rates are effective from January 1, 2018. The new NPK rate of RMB100 /t ($15 /t) equates to roughly a 5% export tariff rate using current prices. This is a significant drop compared to the 2017 rate of 20%, equivalent to $60 /t at current prices to export to South-East Asia.
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