China Survey
NOT SO MUCH A MATTER OF
TAKING THE PISS...
THEY JUST CAN'T GET ANY!
The People's Republic of China (PRC) is desperately trying to find suppliers of urea, but nobody seems too keen to do the business.
It is estimated that China imported about 8 million tonnes of urea in 1987, and it looks like this amount will be surpassed in 1988 -- if, that is, China can get hold of the urea
it wants.
China is reputed to be the third largest producer of urea in the world, but its production cannot keep up with its fertilizer demand as the enormous pressure on China's already beleaguered agricultural industry is beginning to tell. With shortfalls in agricultural produce an ever-increas- ing burden on China's economic system, a push to increase production of many staple products such as grains has, as was mentioned in last week's TARGET Intelligence Report, led to an increase in the demand for fertilizers.
The following table indicates the recent imports of urea to China:
IMPORTS OF UREA TO CHINA
(millions of tonnes)
1984
1985
1986
1987 1988
9.84
7.01
5.92
8.00
(estimate)
?
In 1986, urea was selling at record prices. China reduced its imports during that year.
The reasons why China's buyers are not being able to meet the demand in 1988 would appear to be two-fold.
It seems that there is a general shortage of the fertilizer on the one hand but, to make matters worse, many producers are not too happy about doing business with the PRC.
The price of urea has been rising recently.
No doubt, due to the difficulties other major producers, such as the Soviet Union, Eastern Europe, the US, Indonesia and the Middle East, are having in keeping pace with the rising demand, the price of urea, according to TARGET's sources, is now about $US170 per tonne (about $HK1,326 per tonne).
This is still well short of the record price levels experi- enced in 1986, when urea was selling at about $US230 ($HK1,794) per tonne, yet it is well above the price at the beginning of 1987, when a tonne of the uric fertilizer cost about $US145 (about $HK1,131).
In 1986, TARGET's sources explained, there had been an unprecedented rise in the demand for urea which led to a shortage of supply as producers could not keep pace.
This situation had eased by mid-1987, although a repeat performance of 1986 could now be on the cards.
Hongkong's Position in the Scheme of Things
Some of the urea bound for China is re-exported via Hongkong agents, and the amounts re-exported in 1987 have shown a dramatic increase over the re-export figures for
1986.
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