The nation needs 11 million tonnes of fertiliser this year, 700,000 tonnes higher than last year, stated the ministry as reported by the VnEconomy newspaper.— Photo binhdien

HA NOI (Biz Hub) — The local fertiliser market will face intense competition this year due to oversupply and cheap fertilisers being imported from China, according to the Ministry of Agriculture and Rural Development.

The nation needs 11 million tonnes of fertiliser this year, 700,000 tonnes higher than last year, stated the ministry as reported by the VnEconomy newspaper.

Meanwhile, the local fertiliser demand is expected to reach 2.2 million tonnes of urea fertiliser, 900,000 tonnes of SA fertiliser, 960,000 tonnes of kali fertiliser, 900,000 tonnes of DAP fertiliser, and 4 million tonnes of NPK fertiliser. The domestic market's demand for phosphate fertiliser is expected to reach1.8 million tonnes.

The nation has 500 enterprises producing a total output of 8 million tonnes of fertiliser, thereby meeting 80 per cent of the domestic demand.

Supply of some major fertiliser products, such as urea, NPK, and phosphate, has met the domestic demand. Meanwhile, the urea fertiliser output has often increased against the local demand.

The national urea output is expected to exceed the local demand by 400,000 tonnes.

Oversupply of fertilisers has led to an average reduction of 17-20 per cent in the local selling price since the end of 2013 and even 30 per cent for some kinds of fertiliser, claimed the ministry.

Additionally, the domestic fertiliser market is also facing stiff competition due to cheap Chinese fertiliser imports, it noted. In February, Viet Nam imported 286,000 tonnes of fertiliser, worth US$98 million, including 9,000 tonnes of urea fertiliser and 147,000 tonnes of SA fertiliser.

Chinese fertiliser volume accounted for 31 per cent of the total fertiliser import value in February, the ministry added.

At the end of 2013, Viet Nam increased its import duty on urea fertiliser and DAP fertiliser products from zero to 3 per cent in order to limit the imports of those products, but China also cut its export duty to 2 per cent for its fertiliser products. As the Vietnamese tariff policy was not strong enough against the Chinese tariff policy, the Chinese fertiliser products exported to Viet Nam continued to increase. That situation has had a great impact on the local fertiliser market as well as local fertiliser traders.

According to the Viet Nam Fertiliser Association, the domestic fertiliser industry has experienced a growth in output, but lacks competitive ability. The industry still continues to use old production technology, while the world fertiliser industry uses many new technologies to reduce its production costs. For the long term, the local fertiliser factories will lose their market shares or even have to close if they do not adopt new production technologies.

The association asserted that the industry should restructure the local fertiliser market, and the traders should seek export markets. Meanwhile, the ministries and sectors should control the import of Chinese fertilisers at the border gates in order to stop trade fraud and the import of low-quality fertilisers. — VNS