CIQ process to kick off next week for Chinese amsul exports

The introduction of China Inspection and Quarantine (CIQ) for ammonium sulphate (amsul) exports from next week, while not expected to materially impact available volumes, would mark the start of lengthier inspection times for shipments.  

Multiple local market sources inform that CIQ controls will be introduced for amsul exports from 16 July based on advice from customs. Written guidance has been issued, albeit an official notice is anticipated next week, when details for the CIQ process are also expected to be conveyed.

Some anticipate a similar CIQ process to that already applied for urea, wherein a cargo is typically inspected at the factory or the port with the destination of the shipment to also be declared.

CIQ clearance has allowed Chinese authorities to regulate urea exports. Indeed, local players suggest that the move to introduce CIQ nationwide for amsul is to ensure cargoes are correctly declared. As reported previously, Chinese authorities intensified cargo inspections at some ports in northern China in late-April following reports of containers of urea and potash blends being falsely declared as amsul.

The move to introduce CIQ for amsul is not expected to impact overall export volumes, but will increase the time it takes for cargoes to be supplied. Local market participants and international traders also anticipate some delays to loadings originally planned for July. Broadly, the initial imposition of the CIQ process could slow down business discussions.

There have been no reports to suggest that a minimum floor price will be introduced. Several have noted that such a move would be difficult considering amsul is not consumed in the domestic market and is a by-product of caprolactam production.

Customs data show amsul exports hit a record high of 21.36m. tonnes last year. Despite cuts to operating rates, loadings over January-May this year have been 20% higher year-on-year at 8.37m. tonnes.

The imposition of tougher CIQ processes for amsul has been anticipated by market participants for several months and finally comes as prices have dropped sharply in recent weeks to hit multi-month lows.

Chinese amsul fob values have in recent weeks lost enough ground to more than offset gains made during the first two months following the start of the Middle East conflict.

Standard grade amsul prices rose by as much as $113pt between late-February and late-April but have since lost up to $141pt. Meanwhile, compacted amsul values gained up to $115pt following the Middle East war but by early to mid-April were on the decline and have since shed as much as $135pt.