China Large Metal Firms Call for Cutting Tariff on Fertilizer Export

BEIJING, May 20 - Five Chinese large nonferrous metals enterprises have submitted a request to the Ministry of Commerce for cutting tariff on fertilizer export in a bid to relieve excessive oversupply of their byproduct, sulfuric acid, on the domestic market.

The five companies are all specialized in lead and zinc products, suffering tough sales of sulfuric acid since last year.

They are Zhuzhou Smelter Group Co. (600961.SH), Shenzhen Zhongjin Lingnan Nonfemet Co. (000060.SZ), Henan Yuguang Gold & Lead Co. (600531.SH), and Shui Kou Shan Nonferrous Metals Group, and Anyang Yuguang Gold & Lead Nonferrous Metals Co.

Currently, metal companies' sulfuric acid stocks almost fill up their depots, some analysts say.

Insiders point out that as 70 percent of the domestic industrial sulfuric acid is used for producing phosphate and compound fertilizers, the fertilizer sector's performance determines the price of sulfuric acid.

Data from the China Phosphate Fertilizer Industry Association (CPFIA) show that the country's annual diammonium phosphate and monoammonium phosphate capacities now stay at 15 million tons and 16 million tons, respectively, far higher than the domestic demand of 5.5 million tons and 6.5 million tons respectively.

With large stocks, China's phosphate and compound fertilizer enterprises have to depend on export for healthy development.

The Chinese government started to levy special export tariff on fertilizers from April 1, 2008 (export tariff of 35 percent, special tariff of 100 percent). It later adjusted the tariff to 45 percent for slack season, and 120 percent for peak season as of December 1, 2008.

Such move directly led to glut of fertilizer on the domestic market.

According to an official with the China Nonferrous Industry Association, sulfuric acid prices in China had dived from the earlier 2,000 yuan/ton to about 100 yuan/ton, resulting in sharp shrinkage of producers' profits.

An official with Zhongjin Lingnan Nonfemet Co. suggested the government cut tariff on fertilizer export to support nonferrous metals enterprises.

CPFIA vice chairman Zhang Yongzhi earlier proposed implementing zero tariff on fertilizer export from May.