THE Chinese Government might slap an export tariff of 135 percent on phosphate fertilizers and 100 percent on urea nitrogen, creating concern about prices in an already tight market, Swiss investment bank UBS AG said in a research report Tuesday.

    Quoting news reports, UBS analyst Joe Dewhurst said the tariffs would stop Chinese phosphate exports, removing 19 percent of traded volumes for granular phosphates, which are important for India, Pakistan, Australia and Latin America.

    “Traders from these countries are already voicing concerns on price impacts,” Dewhurst wrote in the report. “The vacuum that will be created is substantial.”

    Dewhurst raised his estimate for phosphate prices by 16 percent to US$1,105 per ton for 2008 and by 47 percent to US$1,100 per ton for 2009.

    China’s tariff may cause spot urea prices to jump, although Dewhurst said he expected them to remain in balance for 2008.

    But he raised his urea price estimate for 2009 by 14 percent to US$400 a ton since China accounts for about 16 percent of traded urea volumes.

    The export tariffs also revealed China, the world’s largest potash consumer, had a weak negotiating position for potash import prices, Dewhurst said.

    “It is likely that China will settle as a minimum at the Indian contract price, but could realistically be at prevailing spot,” he wrote.

    Earlier this month, India agreed to buy potash at the going spot market price of US$625 per ton for 2008 from major suppliers, which then pushed spot prices to US$750 per ton.

    China has been out of the potash market in 2008 as it negotiates its annual price with suppliers.

    Dewhurst raised his overall potash price estimates by 29 percent for 2008 to US$611 per ton and by 62 percent in 2009 to US$850 per ton. (SD-Agencies)