Fear of rising urea prices caused the Chinese government to shut down all urea Customs Inspection and Quarantine (CIQ) activities. The move caused urea prices in North Africa and the Arab Gulf to rise $20-$30/mt while the domestic Chinese price dropped by about the same amount.
The week opened with rumors that the inspections were being halted. Eventually sources reported their contacts at the various export facilities had received official notification that all inspections for urea exports were being halted. The move came just as traders were expected to see a gradual return of China to the export market.
Chinese exports of urea as reported by Trade Data Monitor showed only 31,000 mt exported in the first four months of the year, compared to 602,000 mt shipped during the same period in 2023. What shipments that have occurred are in small lots of 5,000-10,000 mt or less to South Korea and other Asian buyers.
The CIQ process was instituted by the Chinese government to limit exports of most fertilizers. In addition to the usual inspections related to the size and purity of the product, new rules required inspectors to also evaluate the impact exporting nitrogens and phosphates would have on the domestic price and domestic supplies. The government was seeking a way to ensure a plentiful supply of fertilizers for the domestic markets and, at the same time, keep prices down.
So far, the stoppage of urea inspections has not spilled over to the phosphate market. Domestic demand is not as strong for phosphates as it currently is for urea, which has allowed inspectors to clear phosphate exports for shipment, albeit in limited quantities. However, sources reported that DAP producers were called into a meeting with government officials and told to moderate price increases and export quantities or a similar ban will be imposed on their exports.
Exports of DAP and MAP for January-April this year were 850,000 mt against 1.6 million mt shipped during the same period of 2023, Trade Data Monitor reported.