China says some key fertiliser firms to suspend exports

BEIJING (Reuters) -Some of China’s key fertiliser companies said they would temporarily suspend exports to assure supplies in the domestic market, according to a statement on the website of the National Development and Reform Commission (NDRC) on Friday.

The state planner said in a statement that it had summoned the fertilizer firms for a discussion against hoarding and speculation. It did not identify the companies.

The move is the latest by Beijing to tackle soaring prices of major raw materials.

Fertiliser prices in China, which is both a major consumer and producer, have hit records this year amid stronger demand from overseas, lower production domestically and high energy costs.

Urea futures prices on China’s Zhengzhou Commodity Exchange have surged by over a third since the start of the year. They hit record highs of 2,616 yuan ($405.19) per tonne on Thursday before easing 2.7% on Friday.

Spot urea prices were at 2,814 yuan a tonne in early July, according to China’s National Bureau of Statistics, up from 2,674 yuan the prior month.

NDRC’s action follows comments from Premier Li Keqiang last month calling attention to high prices of key farm inputs, a potential threat to the country’s food security.

China exported 3.2 million tonnes of diammonium phosphate fertiliser in the first half of this year, and 2.4 million tonnes of urea, according to customs data.

The NDRC said last month it was launching an investigation into the urea market after a price surge.

It said on Friday it had urged key fertiliser companies to “operate in an orderly manner…and not hoard, drive up prices, or fabricate or spread information about price increases”.

Companies had agreed to “temporarily not arrange fertiliser exports to ensure the supply of fertiliser in the domestic market”, it added.

State-owned enterprises (SOEs) like Sinofert Holdings Ltd and China National Offshore Oil Corp (CNOOC) are likely to be among those curbing exports, said Gavin Ju, principal analyst for fertilizers at CRU Group.

“We do expect (them)… to suspend or curb fertilizer exports and focus on domestic supply as priority in the next few months, which will help to curb domestic fertilizer price increase in near future,” said Ju.

Sinofert, a subsidiary of Sinochem Holdings Corporation, is China’s largest fertiliser distributor, and produces potash and phosphate fertilisers.

Neither Sinofert nor CNOOC immediately responded to request for comment.

($1 = 6.4563 Chinese yuan renminbi)

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