What does the fertilizer tariff New Deal bring to the industry?

Starting from January 1, the “Curriculum Implementation Plan for 2012” issued by the Customs Tariff Commission of the State Council at the end of last year was formally implemented. The program adjusted the import and export tariffs of some products, for example, a low tentative import quota for five major categories of 730 kinds of commodities such as energy resources products, key equipment and parts required for strategic emerging industries, and agricultural production materials. The tax rate, with an average tax rate of 4.4%, is more than 50% lower than the MFN tax rate. One of the most concerns of the industry is the continued collection of special export tariffs on certain chemical fertilizers.

The level of export tariffs on fertilizers directly affects the price and supply of domestic fertilizers, so its tariff adjustment has attracted the attention of the industry. What changes have occurred in the new fertilizer tariff plan? What is the reason for the change? How will these changes affect the industry? With a series of questions, the reporter interviewed some chemical fertilizer companies.

The tightening of small varieties, fine-tuning of large varieties According to the new version of the Tariff Implementation Plan for 2012, the reporter found that there have been two major changes in the export tariff policy for fertilizers.

First, the tax rate of some small-scale fertilizers has tightened.

Ammonium chloride for fertilizers and other unlisted nitrogen fertilizers were changed from zero tariffs on exports in 2011 and fixed tax rates of 7% to differential duties on the basis of sales season, of which the provisional export tariff rate was 7 percent from July to October (off season). The remaining time (peak season) imposes a special export tariff of 75% on the basis of the provisional tax rate; heavy calcium, other phosphate fertilizers, nitrogen and phosphorus fertilizers, and small-package fertilizers are also changed from the original fixed tax rate of 7% for the entire year to 6- In September (off-season), the tentative export tariff rate was 7%, and another 75% special export tariff was imposed during the rest of the season (peak season).

Taking heavy calcium as an example, in 2011, due to the high price of international heavy calcium, coupled with strong demand, China’s heavy calcium exports have reached the highest level of the calendar year. Customs statistics show that from January to October last year, China’s export of heavy calcium reached 1.5583 million tons, while exports during the same period last year were only 900,900 tons, an increase of 72.95%. Such a large amount of exports has attracted the attention of the relevant departments of the country, and the enthusiasm for tightening the export of heavy calcium has been buzzing. Fertilizer export tariffs were introduced in 2012, and heavy calcium export tariffs have been limited as previously expected. Tariff policies are consistent with ammonium phosphate tariffs. In June-September, tariffs for off-season tariffs are 7%. In other months, tariffs for peak seasons are 110%.

Second, the tax rate for large-scale fertilizers is fine-tuned, and the base fertilizer export benchmark no longer includes tariffs.

Compared with 2011, the new tariff plan adjusted the calculation method for export tax rates based on the retention of differential tariffs for urea, monoammonium phosphate, and diammonium phosphate in peak seasons. The biggest change was in the original export price. Tariffs included.

Cheng Lei, a senior analyst at Baichuan Information Fertilizer Industry, believes that the adjustment of the export tariff policy for fertilizers this year can basically be summed up in three sentences: the tightening of export of small varieties, the fine adjustment of the price of large varieties, and the reduction of taxes on imports. The adjustment is to ensure that the domestic fertilizer prices remain at a normal level and prevent exports from driving domestic prices of fertilizers to rise sharply to achieve the purpose of controlling inflation and stabilizing prices.

Cheng Lei told reporters that the tariff policy of 2012 made it clear that the benchmark prices for urea and ammonium phosphate do not include taxation, which is equivalent to increasing the export base price of urea and ammonium phosphate in a disguised manner, which is beneficial to the export of enterprises and alleviating domestic overcapacity; The export quota for phosphate rock has been reduced from the original 1.5 million tons to 1.2 million tons. It can be seen that the country intends to protect non-renewable resources and reduce exports; at the same time, the import tariffs on * yellow have been lowered from 3% to 1%.

According to the new tax rate formula, if the benchmark price includes a tariff and the FOB price of DAP exceeds 3,400 yuan, the export tax rate shall be adjusted upward according to regulations; if the benchmark price does not include a tariff, then only the FOB price will reach 3,638 yuan/ton or more. Starting to increase tariffs in accordance with the new regulations is equivalent to raising the bottom line price of the tax increase by 238 yuan in disguised form. The reporter calculated an account and exported one ton of DAP in the off-season as an example. Assume that the offshore price is 3,800 yuan. If the benchmark price includes a tariff, the export tax rate is 18% and the tax amount is 580 yuan; after allowing the benchmark price to be deducted from the tariff, The tax rate dropped to 9% and the tax amount was 322 yuan.

2 In 2011, due to zero tariffs on exports, exports of small-scale fertilizer ammonium chloride reached a record 521,500 tons. This year's new fertilizer tariffs have increased tax rates for small-scale fertilizers. The picture shows ammonium chloride products being loaded by a company in Xuzhou, Jiangsu. (For CFP)

The response of chemical fertilizer companies is relatively calm. The reporter learned from the interview that since the country is currently approaching the spring season, the focus of fertilizer companies is still on the domestic market. The response to the new export policy is relatively calm.

"The new tariff policy has not changed much compared with last year, and is basically consistent with the previous expectations, so the impact on the urea market will not be too great." Said Ye Guoqing, manager of Shandong Hualu Hengsheng Fertilizer Sales Department.

Chen Zhihao, assistant general manager of Zhejiang Agribusiness Group Co., Ltd., said: “If commodity prices rebounded in 2012, and grain prices were good, China’s urea could still be exported, but before the export, domestic prices will definitely fall back. Wait until the export window. As soon as the period begins, the domestic and international markets should be linked."

"Compared with last year, this year the country revised the calculation method for the export prices of urea, monoammonium phosphate and diammonium phosphate. The most direct effect is that the tax rate is lower than before." said Huang, general manager of the fertilizer sales department of Hainan Chemicals Hainan Base, " To use a metaphor for the image, this time the export tax rate is lowered just like raising residents' tax threshold. For urea, it is equivalent to raising the benchmark price in disguised form, which will benefit the export of enterprises in the long term.” When a reporter asked him where he was Whether the company intends to increase exports, he told reporters cautiously that the company's sales focus is still on the domestic, the company's large-particle urea products for the entire Hainan Island and most of the country to sell. Currently, there are many uncertainties in the international urea market. Whether or not to increase exports will depend on the specific agreed prices when negotiating with foreign companies.

“Monoammonium phosphate and diammonium phosphate are similar. Although the country has lowered the export tax rate, if the international market price is lower than the benchmark price, export profits are limited, and the product will be returned back to the domestic market will also bring the domestic market. Adverse effects.” According to Huang, the general manager, chemical fertilizers are products that involve the vital interests of farmers. They cannot pursue exports because of low tax rates. The original intention of the country's introduction of policies is to reduce the production costs of enterprises through appropriate exports on the basis of stabilizing the domestic market.

In contrast to urea, monoammonium phosphate and diammonium phosphate, the state’s adjustments to ammonium chloride, heavy calcium, nitrogen and phosphorus, and small-package fertilizers have become tight. In response, some people in the industry expressed their views to reporters.

As an important phosphate fertilizer company in China, a staff member responsible for the sales of compound fertilizers from the Qifu Group told the reporter: “Heavy calcium used to be a 7% tax rate in the whole year and is now in season. In addition to exporting heavy calcium, he has to pay 7 In addition to the provisional tax rate of %, a special export tax rate of 75% will be paid. The state's adjustment of the export tax rate for heavy calcium and nitrogen-phosphorus compound fertilizers will have a significant impact on the company's export sales."

Luxi Chemical Industry Group Co., Ltd. Manager Li Fei also said that the tariff adjustment on urea and monoammonium phosphate, diammonium phosphate has little effect, but the export of small package fertilizer products have a greater impact.

Cheng Lei stated that in 2012, the country will impose light season tariffs on nitrogen and phosphorus binary fertilizers, ammonium chloride, heavy calcium, and small packages under 10 kg. The tariff of ammonium chloride is the same as that of urea season. The other three products have the same time as the season of phosphate fertilizer, which means that the export time of small varieties is the same as that of large fertilizer varieties. In a sense, the export of small varieties is basically blocked. Taking a small packaged product as an example, the cost is about RMB 60/t higher than that of a large packaged product. Under the same tariff conditions, it is difficult for small packages to have large exports, unless the export prices of large packages are much higher than the benchmark prices, but this is unlikely.

“According to the 3.95 million tons of nitrogen and phosphorus fertilizer exports in 2011, the state tightened the export of ammonium chloride. While ammonium sulfate is an environmentally friendly product, the country will not move the tax rate of this product. The tariff table for small packaging products in June Is the off-season tariff period, whether or not small-packed urea can be exported during this time? Phosphorus and potassium fertilizers will be subject to 7% tariffs throughout the year. Is this product profitable? These may become issues of concern to everyone, but in the end we must see the time. International market demand." Cheng Lei said.

Responding to the surplus can not rely on exports alone in the interview process, many people in the industry also expressed the view that at present the problem of excessive domestic fertilizer excess capacity, companies can not rely entirely on exports to solve problems, but to pay attention to structural adjustment.

According to incomplete statistics, the current national urea capacity is about 34 million tons per year, which is more than 30% of domestic demand; the production capacity of phosphate fertilizer is 21.5 million tons per year, which exceeds the demand by more than 20%. In spite of this, the pace of expansion of domestic nitrogen fertilizer and phosphate fertilizer production has not yet stopped. Overcapacity has become the biggest problem faced by the fertilizer industry.

Lu Xi Chemical Li said that at present nitrogen fertilizer companies have to solve the problem of overcapacity through exports has become increasingly difficult. The price of urea is now extremely volatile, while the prices of raw materials such as coal and natural gas continue to rise. In the winter, many urea companies can only reduce production. It is difficult to adjust excess production capacity through exports. In 2010, the global urea supply will be 152 million tons. By 2015, it will be close to 200 million tons, and the annual increase will be more than 5%, while the demand increase will be only 3% in the same period. From a longer-term perspective, solving the problem of overcapacity and adjusting product structure is the way out for urea companies.

“In 2010, domestic urea exports were 7 million tons. After the national tightening of tariff policies last year, exports fell by about half. In fact, the impact of these exports on the domestic market is not great. This year, the state’s appropriate reduction in tax rates is mainly to Helping enterprises solve the difficulties of production in the off-season, but it is basically all state-owned large enterprises that can really make profits through this export. Therefore, companies cannot completely pin their outlets for overcapacity on exports, Cheng Lei said.

An industry source stated that the country’s clear export benchmark price does not include tariffs. It should take into account the fact that fertilizer companies are squeezed by raw materials and other costs, and the production and business environment is difficult, enabling companies to properly export part of fertilizers in the off-season to ease cost pressures. However, the person in the industry also stated that fertilizer production and distribution companies should consciously restrain their business operations. They should not rise in any direction and rush to export. They still need to ensure domestic demand as the basic goal.

In addition, there are people in the industry who have made their own proposals for fertilizer export policies.

Han Hongmei, a senior engineer of the Inorganic Chemicals Division of the Petroleum and Chemical Industry Planning Institute, told reporters that the country’s export restrictions on urea, ammonium phosphate, and other basic fertilizers are relatively relaxed, which is conducive to appropriate increases in profits for enterprises. In order to ensure the supply of the domestic market and stabilize the market price, the state has strict restrictions on the export of small-package fertilizers, heavy calcium and other products in the peak season. There are advantages and disadvantages to this tight and loose, and the overall balance needs to be achieved. In response to this tariff adjustment policy, she made two suggestions:

First, the country's efforts to adjust basic fertilizers this year have been modest, demonstrating stable and continuous policy considerations. For the sustained and healthy development of the industry, she suggested that the country should not frequently change the export tax rate for urea, ammonium phosphate and other bulk fertilizer products.

Second, on the basis of ensuring basic fertilizer control effects, the scope of the state's control of varieties should be more comprehensive and complete. In previous years, the tariff policies introduced by the state mainly focused on basic fertilizers, and the export restrictions on urea, ammonium phosphate and other products were very strict. As a result, some companies have found a way to make small-package chemical fertilizers and nitrogen-phosphorus fertilizers that have relatively loose export controls. Due to the low tariffs on exporting small packaged products, many companies dismantled large-packaged products, sold them in small packages, and evaded tariffs. This also led to a 4.90% year-on-year growth in exports of binary fertilizers in the first 10 months of 2011. The country’s policy to reduce fertilizer exports was weakened. This year, the country has blocked this loophole by imposing a differential tax rate during the busy season. In the future, the policy should be more comprehensive and complete.

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