Sharp rise in fertiliser imports in first quarter

According to the Ministry of Industry and Trade (MoIT), Vietnam utilises 11 million tonnes of fertiliser annually and 90 percent of the fertiliser used is inorganic.

Domestic production is not able to meet local demand, therefore Vietnam must import large quantities of fertiliser, mostly from China.

In 2016, Vietnam imported 4.16 million tonnes of fertiliser, valued at US$1.1 billion, down nearly 8% in volume and 22% in value compared to 2015.

Photo: cafef.vn

One of the reasons for the surge in imported fertilisers, especially from China, is the devaluation of the Chinese yuan against the US dollar, making Chinese fertilisers cheaper than domestic ones.

In addition, two out of four urea production plants of the Vietnam National Chemical Group (Vinachem) use coal as their input material. The increasing coal price causes a rise in production cost, reducing competitiveness over import products.

These urea production factories, expected to completely replace the imported urea, have been losing money over the years, causing a significant decline in domestic supplies and forcing domestic enterprises to import the substance to meet demand.

The price of imported urea fertiliser in the third week of March in the Hai Phong Port was US$237

per tonne, whereas the domestic price ranged from VND6.2 million to VND6.4 million per tone (US$274-US$283), equivalent to 14%-18% higher.

The sharp rise in fertiliser import is one of the reasons that domestic fertiliser companies asked the Vietnam Competition Authority (VCA) earlier this month to apply trade defence instruments on import fertiliser.

The MARD is seeking opinions on a draft decree on fertiliser management designed to decentralise the management of fertiliser and assigning responsibility to local authorities.

Currently, fertiliser management is under the control of two ministries, with the MoIT managing inorganic fertiliser and MARD managing organic fertiliser.