China: fertiliser export policy

The fertiliser export policy of the People's Republic of China rests on a constant balancing act between two imperatives: supplying its vast home market, the world's biggest consumer of plant nutrients, and retaining some leverage in overseas markets. To this end, Beijing commands a full range of regulatory and fiscal tools which it deploys on a recurring basis, depending on domestic price pressures and food security objectives.

Export control instruments

The Chinese authorities chiefly resort to export quotas, export duties and targeted administrative controls on strategic products. Urea and phosphate fertilisers are the two most closely watched categories, given their pivotal role in feeding cereals and oilseeds. Any fertiliser containing potassium faces export taxes; consequently, locally manufactured NPK compound fertilisers barely find any outlet abroad^[1][2]. This tariff differentiation chokes off outward trade of complex products incorporating that nutrient.

Evolution and impact on international markets

Export restrictions tightened from late 2021 onwards, against a backdrop of spiralling energy costs and a global food crisis. From that point, Chinese urea sales to foreign markets dwindled to a trickle^[3]. By end-2024, such exports were virtually non-existent^[4]. This prolonged shut-off of a supply source that had traditionally fed South-East Asia, Latin America and Oceania helped reshape global fertiliser trade flows, boosting the share of Middle Eastern and Russian exporters in those destinations. World urea trade reached 55.1 Mt in 2023, yet proceeded without meaningful participation from the top global producer^[4].

The rationale behind these decisions has remained unchanged: ensuring national farmers pay less for fertiliser than international market levels and driving up the productivity of cultivated land^[3][4]. This approach forms part of a broader set of state interventions in support of the agricultural sector, comparable to the direct subsidies paid in India — where a retail price ceiling on urea has been maintained for over a decade — or the tariff-capping mechanisms applied by other major consuming powers^[5].

Outlook and uncertainties

Medium-term industry projections single out "support policies" as one of the drivers of fertiliser demand in China^[6]. The timing of loosening and tightening moves remains unpredictable for market operators, who must build this regulatory volatility into their procurement strategies. The occasional opening of out-of-quota or duty-free windows, when it occurs, triggers immediate jolts in East Asian price benchmarks on a FOB basis.

The question of ammonia and its urea outlet lies at the heart of this equation. China commands a colossal industrial capacity, founded partly on coal gasification, which affords it a degree of independence from natural gas for nitrogen synthesis. This structural feature, coupled with the overriding priority given to food self-sufficiency, suggests that export restrictions will remain a permanent instrument of Chinese fertiliser market management, even if their intensity fluctuates with market conditions.