China raises, extends fertiliser export duties

SHANGHAI, Aug 30 (Reuters) - China will raise export duties on nitrogenous fertilisers to 150 percent by the end of the year to curb outflows, the official Xinhua news agency reported on Saturday, as the country seeks to control agricultural costs.

The increase, which will also apply to synthetic ammonia, will be in effect from Sept. 1 until Dec. 31, while a 100 percent duty on other fertilisers will be extended for an extra two months to Dec. 31, the report said.

China, the world's largest fertiliser market, slapped an extra 100 percent duty on fertiliser exports in April, with effect to Sept. 30, lifting tariffs as high as 135 percent for some products such as urea to keep more production at home.

The duties tightened supply further in the global market.

China's exports of urea and fertiliser compounds had increased sharply at the beginning of the year, as exporters were attracted by rapidly rising international prices.

China has been grappling this year with inflation rates at the highest in more than a decade, primarily reflecting higher food costs, although annual consumer price inflation eased to 6.3 percent as of June from a peak of 8.7 percent in February.

Beijing often uses tariffs as a policy tool to discourage exports and dampen domestic prices of commodities ranging from metals to wheat flour. Tariffs are easier to administer than price controls or subsidies, and leave less room for corruption.

The chief executive of Sinofert (0297.HK), China's main distributor of imported fertilisers, echoed the predictions of several analysts when he said in an interview this week that China could lift urea export tariffs again. (For details click [ID:nHKG331076]

The Xinhua report quoted analysts as saying that the latest export tariff hike and extension would close the door tighter on China's fertiliser exports. (Reporting by Edmund Klamann; Editing by Peter Blackburn)