Fertilizer levy VAT recovery has been a week to review the fertilizer market performance this week, early speculation caused prices VAT little hard to find, urea prices fall, MAP, DAP prices remained stable, potash prices.
The reason for this is simple: the introduction of VAT policy execution time than nearly 20 days in advance, that the policy will push up the price of people, goods prepared in advance; there is no confidence in the market outlook, policy began after execution , let alone getting goods, resulting in a serious shortage of short-term needs of the situation.
Potash prices are a special case: on the one hand a strong monopoly; on the other hand domestic potash fertilizer production accounts for more than 60% of total domestic demand, but little input tax, domestic potash fertilizer manufacturers if they can not raise prices, profits will be significantly reduced . Manufacturers hope to pass on the cost of VAT brought downstream. But this may just be wishful thinking manufacturers, because a lot of negative factors potash market: First, domestic potash fertilizer production capacity is growing; the second is lucrative potash, even if the cost can not be passed on and will not inhibit the supply; the third is global potash serious excess capacity; Fourth agricultural prices in the doldrums, demand may decline; five domestic and international potash monopoly in lower individual enterprises the ability to control the price decline; six are in global commodity prices is still represented by a double-dip process.
The author focuses on what this monopoly and commodities lower second bottom impact on the potash market.
Think of the financial crisis of 2009 potash market, when the self-sufficiency rate of domestic potash at 40%, and imports of highly concentrated, potash fertilizer import monopoly enterprises want to use to avoid potash prices fell sharply, but their wishes did not materialize eventually began to collapse in April. The current situation is already diversified import channels, self-sufficiency rate of domestic potash fertilizer greatly improved, high port stocks at this stage and taxes lower than the domestic new product, excessive prices, accumulated to a certain extent may lead to a re- Potash destocking crisis.
According to my observation, most commodities in the same macro-cycle, could not escape the trend of similarities, only has a matter of time. This can give us a warning: oil and agricultural prices began to dip in the second half 2014, while potash first dip in the second half of 2013, in 2014 the success of the first bottom, in 2015 the prices of imports of large contracts It has risen. I regret to see prices since the second half of last year's dip in international commodity did not succeed, and even the possibility of a double dip. So we have to think: Potash VAT levy Although positive, they really can be significant price increases it?
Compared to potash, nitrogen and phosphate fertilizer production enterprises tax increased marginally, so the introduction of VAT recovery pushed up the price a little attitude is just pushed a little, not pushed to follow the market, which resulted in the introduction of VAT Urea prices do not rise after falling phenomenon. Notwithstanding the cost of the fertilizer market support positive, we must return to the level of supply and demand.
In summary, the fertilizer levy VAT recovery effects on phosphate and nitrogen has been basically eliminated, but there will also impact on potash, the game will continue.