Market glut hits fertiliser industry
Market glut hits fertiliser industry
Domestic nitrogenous fertiliser manufacturers are worried about selling fertiliser due to an oversupply by local manufacturers, along with high imports.
According to the Ministry of Industry, four existing nitrogenous fertiliser plants have a total capacity of 2.2 million tonnes of fertiliser per year, while domestic demand has reached 2 million tonnes per year, as reported by the Dau tu (Investment) newspaper.
Further, total capacity is expected to increase by 500,000 tonnes of fertiliser, based upon a plan on expanding the Ha Bac Nitrogenous Fertiliser Plant, to be completed at the end of this year.
By the end of April, the Viet Nam Chemical Group, including Ha Bac Nitrogenous Fertiliser Plant and Ninh Binh Nitrogenous Fertiliser Plant, had an inventory of 130,000 tonnes of fertiliser.
Additionally, the ministry said 800,000 tonnes of nitrogenous fertiliser were imported to Viet Nam last year, mainly from China. High imports in 2013 had created large inventories at enterprises under the Viet Nam Chemical Group and the Viet Nam Oil and Gas Group (PetroVietnam).
A representative of the Chemical Department at the Ministry of Industry and Trade said the price of nitrogenous fertiliser on the Chinese market was lower than the price of the product in other countries, due to high supply and high inventory. Further, the oversupply of nitrogenous fertiliser in China's market is expected to continue until 2017.
Therefore, local nitrogenous fertiliser producers are worried that China would promote exports of the fertiliser to reduce inventories at home, including to Viet Nam.
The ministry has studied setting limits on imports of the types of fertiliser that local manufacturers could meet, including nitrogenous fertiliser.
Limits on fertiliser imports would be applied to the market, depending on the local supply and demand on fertiliser for different periods.
Cao Hoai Duong, general director of PetroVietnam Fertiliser and Chemical Corporation (PVFCCo) managing Phu My Nitrogenous Fertiliser Plant, said if the state increases import taxes on fertiliser to limit imports, the taxes would not be effective because most fertiliser imports from China to Viet Nam arrive through auxiliary border gates and border crossings outside border-gates, but not via main or international border gates.
According to the ministry, in the first five months of this year, output of nitrogenous fertiliser had a year-on-year increase of 10.3 per cent to 938,900 tonnes. Meanwhile, since early this year, the local fertiliser market has not fluctuated much due to the high supply of the product.
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