Chinese authorities will place export quotas on phosphate fertilizers as they seek to protect domestic supplies and reduce input costs for farmers. Exports are expected to be restricted to just over 3 MMT for the SH of the year. These latest restrictions follow a requirement for inspection certificates introduced in October 2021,. This was in response to a surge in exports, as well as electricity shortages that forced some plants to cut production. The new policy is set to reduce Chinese fertilizer exports even further, which totaled just 1.2 MMT in June, a 50.4% YoY decrease. The main destinations for these shipments were Brazil, Indonesia, and India. Brazil and India saw the largest fall in trade, with June exports to Brazil down 79.5% YoY at 175,000 tonnes and exports to India decreasing by 59.6% YoY to 285,000 tonnes.

The quotas will add to already tight global fertilizer supplies as other export quotas have been placed by major producers Russia and Belarus. This will further limit imports for countries which have placed sanctions on Russian and Belarussian fertilizers, particularly in Europe whose fertilizer producers are struggling with high natural gas prices. The price of Di-ammonium Phosphate fertilizer (FOB US Gulf) averaged $784 per tonne in June, up 29.6% YoY. Urea (FOB Black Sea) prices have risen by 75.5% YoY to $297 per tonne and Potash (FOB Vancouver) by 177.8% to $360 per tonne. Fertilizer prices have fallen since reaching a peak in April, however. This can partly be explained by lower demand from farmers, many of whom are reducing fertilizer use or choosing to plant less fertilizer intensive crops such as soybeans.

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Vietnam exported 3 MMT of woodchips in June, a 55.5% YoY increase and the highest monthly total on record. Demand for Vietnamese woodchips has largely come from China. Vietnam exported 1.7 MMT to China in June, a 33.4% YoY increase. Exports to Japan were also up 60.8% YoY, totaling 700k tonnes. There has been a significant expansion of Chinese pulp processing capacity over the last decade, driven by demand for paper packaging, tissues, and specialty paper.

With the supply of wood fibers tightening, Vietnam’s lower quality, but cheaper wood chips, have steadily become more preferred by Chinese pulp mills over higher yield fibers from Australia, Chile, and Canada. Vietnam’s share of Chinese wood chip imports has increased from 18% in 2018 to 40% in 2022. Australia, on the other hand, has seen its share fall from 24% to 13% over the same period. The trade has mostly benefitted the Supramaxes, with volumes totaling 1.2 MMT in June, an increase of 70.3% YoY. Panamaxes and Handies saw smaller YoY increases of 30.6% to 560k tonnes and 33.4% to 540k tonnes, respectively.