The amount of urea funnelled through Hongkong in 1987 was 21,699,627 kilograms (about 0.022 million tonnes) which represented about 0.27 percent of China's 1987 demand for the fertilizer, compared to 2,238,550 kilograms (about 0.002 million tonnes) which repre- sented about 0.04 percent of China's 1986 demands.
In terms of the dollar value of
the urea, this represents an in-
crease from 1986 to 1987 of more than 400 percent, from $HK3.5
million to $HK15.7 million.
As for 1988, in the first 3 months of this year, 112,000 kilo- grams of urea were re-exported from Hongkong to China. This compares to 30,000 kilograms re- exported during the first quarter of 1987 and this represents an increase of more than 360 per- cent on a comparative basis over that period.
'However, because of all the cancellations, buyers are now insisting on performance bonds of around 5 percent of
the value of the contract.
'But now it seems that due to the (worldwide) shortages of urea and the increase in de- mand, wholesalers in Hongkong
have run out of stock.'
The Chinese official also dis- missed any suggestion that China was short of foreign exchange, saying that China was willing to pay $US160 (about $HK1,248) per tonne for urea, and that the coun- try had absolutely none to export itself.
A Lack of Trust, Perhaps
This might not be enough how- ever. One European supplier ex- plained to TARGET that the going price for a delivery of urea to a Chinese port was about $US170 (about $HK1,326) per tonne.
TARGET's source explained that many suppliers were not keen on doing business with the
PRC.
A lack of fertilizer could exacerbate China's grain storage
One Hongkong businessman, who is a fertilizer wholesaler, told
TARGET: "The situation is tight in China at the moment. The demand for urea is increasing, but Chinese buyers do not seem able to source the material.'
The wholesaler explained further: 'I do not think that this has anything to do with a shortage of foreign exchange, but rather that suppliers can not fulfil their agreements due to the rise in prices and the shortages around the world,'
An official of one major Chinese importer, based in Hongkong, also bemoaned the shortages of urea.
The official told TARGET: 'A lot of contracts for the im- portation of urea into China, which were entered into by the Chinese Authorities and various suppliers over the last 2 years, have been cancelled because the suppliers were not able to get sufficient urea to fulfil their agreements.'
The Chinese official also put this down to worldwide shortages and rising prices.
The official continued: 'Many suppliers who entered into contracts have actually had to forfeit their performance bonds (a performance bond is usually approximately 2 per- cent of the value of the contract).
The source said: 'Suppliers will not do business with PRC directly because they offer shipping terms that are not ac- ceptable to any normal person.
'The Chinese want it all unloaded etc, and that is usually the duty of the receiver. In addition, the PRC is never pre- pared to pay enough, or at least they try not to pay the price.
'It is often better to do business with private co-operatives in the PRC, which are usually willing to cough up, rather than with the Chinese Government or its agents.
'But the situation now stands that whenever you are dealing with the PRC, overseas suppliers always demand a middle man in Hongkong -- and usually a non-Chinese at
that.
"They just plain do not trust the Chinese to pay up!' With that sort of attitude facing Chinese buyers, perhaps
it is not a little surprising that they are currently finding it tough to get hold of uric fertilizers which are so vital to the country's efforts to increase its food production.
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