Association: In order to stabilize market expectations and facilitate early exports, we plan to lower the guidance price for the third quarter or arrange exports in batches based on the extent of price reductions in each region relative to the guidance price for the second quarter. What do you think would be the most suitable arrangement? Please have each enterprise conduct research on this matter.
Morning. Urea mkts started the week quiet (and wide) with IPL awards still awaited, and continued uncertainty surrounding M.East conflict and trade flow through the region. On Int'l paper, May AG found value again at $815, while Nola saw improved bid support after values fell sharply on Fri. Mkts framed:
AG
Apr $825//$865
May $760//$825 – traded $815
Jun $680//$750
Cfr Brazil
Apr $750//$820
May $680//$760
Jun $650//$725
Jul $650//$715
Aug $640//$710
Egypt
Apr $820//$890
Brazil Amsul
May $260//$290
Jun $260//$290
Nola
Paper:
Apr $670//$700
May $625//$670
Jun $600//$645
Jul $500//$565
Aug $490//$560
UAN Nola
Apr $500//$540
May $500//$535
DAP Nola
Apr $720//$750
May $780//$800
June $700//$775
MAP Brazil
Jun $880//$910
Spain and Italy reexporting urea to India
Mike Tyson famously said, “Everyone has a plan until they get punched in the mouth”, and for many farmers this year, they may think that expression was aimed at them.
The risk of farming is starting to rise. Input costs are extremely high, fertiliser is in short supply, grain prices are flat, and now an El Niño is forecast. This creates a situation where margins are at risk.
The question is not whether El Niño matters, but how much it shifts the odds and where that risk is most concentrated. To answer that, we went back through more than a century of Australian wheat data, using production records dating back to before Federation and comparing each El Niño year with the seasons in the same era.
This approach removes the long-term trend in yields and isolates the seasonal signal, allowing for a clearer view of how crops perform relative to the conditions at the time rather than against a different technological era. The result is consistent and difficult to ignore.
In El Niño years, Australian wheat yields are typically around 15pc lower than surrounding seasons, but focusing on the average alone misses the real story. What matters is the distribution of outcomes and how the risk balance shifts. Where you are in the country matters.
Across the dataset, more than half of El Niño years finish at least 10pc below expectation, 36.8pc fall more than 20pc short, and 23.7pc drop by 30pc or more. This is not a marginal change; it is a clear shift in the likelihood of underperformance, particularly at the lower end of the distribution.
However, the national result only tells part of the story. When the data is broken down by state, the differences become far more pronounced, and the uneven nature of El Niño risk becomes clear.
CLICK TO ZOOM +
New South Wales carries the greatest exposure among the major wheat-producing states. In El Niño years, 50pc of seasons fall more than 20pc below expectation and 34.2pc drop more than 30pc, leaving a distribution that is heavily skewed to the downside. Good years still occur, but poor outcomes are far more common.
Victoria and South Australia sit in the middle. In both states, around one-third of El Niño years fall more than 20pc below expectation, at 31.6pc and 34.2pc respectively, while severe outcomes occur less often than in New South Wales but remain a consistent feature of the distribution.
Western Australia presents a different profile. While El Niño still increases risk, the magnitude is smaller, with 28.9pc of seasons falling more than 20pc below expectation and only 15.8pc falling more than 30pc. The distribution is more balanced, with fewer extreme downside outcomes.
Queensland produces the most extreme results, with 71.1pc of El Niño years falling more than 20pc below expectation and 47.4pc dropping more than 30pc. These results highlight significant downside risk, although they should be interpreted with caution given the smaller production base and higher volatility.
The key takeaway is not that El Niño guarantees a poor season, because it does not. In every state, there are years when yields hold up or even exceed those of surrounding seasons.
What changes is the balance of outcomes.
The upside is still possible, but the downside becomes more likely and, in some regions, significantly more severe. This distinction is critical, particularly in a year where input costs are high and margins are already under pressure.
In a neutral season, the range of outcomes is more balanced, but in an El Niño year, the middle of that distribution shifts lower, and the downside risk increases, raising the likelihood of a poor result even if a good season remains possible.
In New South Wales, that shift is pronounced, while in Western Australia it is more contained, but across all regions the direction is consistent. The odds move against you, even if they do not guarantee the outcome.
That has practical implications for how the season is approached, influencing decisions around input use, yield expectations and overall risk management. There is no single correct response, because every farm is different, but the underlying message is clear.
El Niño does not guarantee a bad crop, but it makes a good one harder to achieve, and in a year when margins are already tight, that shift in the odds cannot be ignored.
China Fertilizer Trade – Mar 2026 Update to details:
China shipped 8.16 mln t of fertilizers in Jan–Mar 2026, up 14.1% y/y
Beijing – China (excluding Hong Kong, Macao and Taiwan) exported a total of 8.16 million tonnes of all types of fertilizers in the first three months of 2026, a year-on-year increase of 14.1%, according to customs figures released.
Ammonium sulphate remained the country’s biggest export product, with January-March shipments reaching 4.5885 million tonnes.
In March alone, the five best-selling fertilizer export lines were:
1. Ammonium sulphate – 1,711.83 k t
2. Other Fertilizers with HS Code 31059090 (Include NK fertilizer)– 276.0 k t
3. Superphosphate with P2O5 content below 35% – 229.5 k t
4. Ammonium Chloride for Fertilizer – 202.6 k t
5. Superphosphate with P2O5 ≥ 35% (excluding TSP) – 129.3 k t
Import demand was dominated by raw materials. Over the three-month period China’s top five fertilizer and feedstock imports were:
1. Other potassium chloride (excluding pure KCl) – 4,484.8 k t
2. Sulphur – 1,550.1 k t
3. Un-ground apatite – 518.1 k t
4. NPK compounds – 305.8 k t
5. Pure KCl – 49.1 k t
March deliveries consisted of 516.1 k t of sulphur, 1,525.7 k t of potassium chloride (including pure KCl), 120.0 k t of NPK compounds and 6.4 k t of ammonia.
Yes, there was. The China Sulfuric Acid Industry Association (中国硫酸工业协会) held the 2026 H1 Sulfur Industry Chain Market Exchange Conference (2026年上半年硫产业链市场交流会) in Tongling on April 15–16, 2026 — just days ago.
Key details from the official notice:�
Organizer: China Sulfuric Acid Industry Association, co-hosted by Tongling Nonferrous Metals Group Co., Ltd.
Venue: Tongling Tongquetai Jinling Hotel, Yian District, Tongling, Anhui Province
Topics covered:
Macroeconomic situation analysis
International sulfuric acid and sulfur market analysis and trade outlook
China's sulfuric acid and sulfur market analysis
Non-ferrous metals industry outlook
International and domestic phosphate fertilizer market analysis
China's energy security and its impact on domestic sulfur production
The choice of Tongling as the venue is fitting — Tongling Nonferrous Metals Group is one of China's largest copper smelters and a major sulfuric acid producer, with an annual sulfuric acid production capacity of around 600 million tonnes as a byproduct of copper smelting.
It has been reported that a sulfuric acid conference was held in Tongling. During the conference, it was announced that: first, the export of sulfuric acid will cease starting in May; second, the export of ammonium sulfate will be subject to legal inspection; third, export quotas for urea have been issued. Not only traditional urea exporters will have quotas, but also earlier participants in the supply guarantee program will receive some urea export quotas. This is because the current international market price for urea exceeds 6,000 yuan/ton, while the domestic price ranges from 1,800 to 1,900 yuan/ton. By utilizing high profits to offset losses incurred during the supply guarantee period, fourth, there has been no news regarding the export quota for phosphorus fertilizers. It is highly likely that exports for May have already been ruled out, as exporting at current international market prices would result in losses for phosphorus fertilizer companies. It would be better to issue urea export quotas.
China Morning Briefing 2026-4-21
❤ Urea: If there are no unexpected events in the short term, the main region’s urea market will continue along its current trajectory. There are no signs of a downturn, and the market will remain stable and firm until around the end of the month/beginning of the next month.
❤ Synthetic Ammonia: From Saturday to yesterday, the synthetic ammonia market in major production regions showed mixed trends. Some ammonia plants that had undergone earlier maintenance have resumed operations, while Shandong experienced a short-term increase in ammonia production. Prices declined moderately after reaching high levels due to rational adjustments. In contrast, prices in the Hebei region rose due to the widening price gap with neighboring markets and improved regional supply and demand. However, after the price increase, adjustments in production, maintenance, and the gradual return of malfunctioning ammonia plants at integrated enterprises, as well as downstream resistance to high prices, have gradually absorbed the initial benefits of tight supply. Nevertheless, essential demand remains, thus predicting limited downward pressure on the market.
❤Ammonium sulfate: The market for ammonium sulfate remained stagnant and cautious yesterday. Due to the lack of pressure on short-term sales, grade C ammonium sulfate remained high and stable. However, the bidding for coke-grade ammonium sulfate for this week has not yet begun, and the market is characterized by a strong atmosphere of waiting and observation. Without any changes in the international situation or the supply and demand dynamics, it is expected that the market for ammonium sulfate will likely continue its narrow range of fluctuations in the short term.
❤Ammonium chloride: The domestic market for ammonium chloride experienced a relatively subdued trading atmosphere yesterday. The production of compound fertilizers has decreased, and there has been less enthusiasm for purchasing ammonium chloride. The caustic soda and ammonia (CAB) enterprises are primarily fulfilling earlier contracts and are holding prices steady due to lack of inventory pressure. New orders have been received poorly, and there has been little change in the short-term supply and demand dynamics. The price of ammonium chloride has been stable.
❤Melamine: The development of the melamine market in China yesterday was relatively weak. The market could not conceal its pessimistic sentiment. End-user enterprises showed moderate purchasing enthusiasm, and demand remained weak. Additionally, companies that had previously halted production had gradually resumed operations, leading to an increase in industry capacity utilization. Market spot supply was abundant, and the supply-demand balance remained weak. Overall, the market trend was characterized by brief periods of weak fluctuations.
❤Potash: The domestic potash market has shown relatively stable trends. The availability of imported potassium chloride in the market is limited, and traders’ quotes have largely maintained the previous prices. The market price for imported 60% Lao potash typically ranges from 3050 to 3330 yuan/ton, with a pattern of lower prices in the north and higher prices in the south. The production costs for sulfuric potash manufacturers remain high, and they are steadily shipping their products.
❤Phosphate Fertilizer: The domestic market for monoammonium phosphate remained strong yesterday, with no significant changes in prices. Many manufacturers have stopped taking orders or have taken only a small number of orders. Downstream industries are resistant to high prices, and it is difficult to find low-priced products in the market. Transactions are limited, and the market is primarily characterized by short-term stalemate and cautious observation.
The domestic diammonium phosphate market saw a narrow range of fluctuations yesterday. Raw material costs remained high, demand was relatively weak, and the spring planting season was drawing to a close. Prices in the northeastern region exhibited a narrow range of fluctuations. Downstream operations continued to prioritize purchasing based on demand. There was a strong sense of market uncertainty, and the market is expected to remain in a state of consolidation in the short term.
❤Compound fertilizers: The main upstream raw materials have been experiencing a period of moderate fluctuations and adjustments, which has not weakened the support for the costs of compound fertilizers. The market continues to primarily absorb earlier orders, and new orders may not improve in the short term. It is expected that the compound fertilizer market will continue to stagnate and consolidate in the short term, driven by both costs and demand. Additionally, as some facilities reduce their load or come to a halt, the supply continues to decrease.
## *Urea Market Updates – April 20
### Shandong Province
*Shandong Shouguang Lianmeng: Urea prices remain stable. Current ex-factory price for small granules is 1,840 yuan/ton; large granules are 1,960 yuan/ton. The production units are operating normally.
*Shandong Ruixing: Production units are operating normally with a daily output of 10,500 tons. Prices remain stable: small granules at 1,840 yuan/ton and large granules at 1,960 yuan/ton.
*Shandong Mingda: Urea plant units are operating normally. Prices remain stable, with small granules quoted at 1,840 yuan/ton.
*Shandong Hualu-Hengsheng: Prices are stable. Small granules and medium granules are quoted at 1,840 yuan/ton; large granules are 1,960 yuan/ton. Production is at full capacity with a daily output of approximately 5,500 tons.
*Shandong Mingshui: One set of urea units is operating normally. Prices remain stable, with small granules quoted at 1,840 yuan/ton.
### Hebei Province
*Hebei Dongguang: Units are operating normally with a daily output of about 3,400 tons. Prices are stable, with small granules quoted at 1,830 yuan/ton. Resources are mainly sold to downstream compound fertilizer plants.
*Hebei Tianyuan Chemical: Units are operating normally with a daily output of about 1,000 tons. Prices remain stable, with small granules* quoted at 1,830 yuan/ton.
China Morning Briefing 2026-4-20
❤ Urea: The domestic urea market experienced steady and robust performance last week. The difference between domestic and international prices supported export expectations, industrial demand remained strong, local agricultural sales were driven by demand, and enterprise quotations remained stable under the influence of guidance prices. Due to the interplay of various factors, market fluctuations were limited. Downstream buyers purchased as needed, and it is expected that the market will maintain a situation of stability and stalemate in the short term.
❤Melamine: The domestic melamine market price experienced a rapid decline last week. The prevailing pessimistic sentiment was evident, as some end-users were not comfortable with the current pricing. As a result, new orders from companies were scarce, and inventory pressure surged. It is expected that there will still be room for melamine prices to fall further.
❤Synthetic Ammonia: Last week, the market in the main regions for synthetic ammonia production in China continued to experience rising prices. This was due to additional malfunctions at ammonia plants in Shandong and Jiangsu provinces, as well as the fact that earlier maintenance work and malfunctions had not yet led to the resumption of production. Supply within the market became temporarily tight. However, demand in the phosphorus fertilizer industry weakened, and prices in Hubei province declined. It is expected that maintenance and the recovery of malfunctioning ammonia plants this week will lead to a relaxation of the tight supply-demand situation, although there is still a risk of downward pressure on high prices.
❤Ammonium chloride: The domestic market for ammonium chloride remained stable last week. The integrated alkali enterprises continued to prioritize shipments. New orders were generally received. Given that some facilities will undergo concentrated maintenance in May, supply is expected to decrease. As a result, companies are keen to maintain prices. As the start-up rates of compound fertilizer enterprises have declined, their enthusiasm for purchasing ammonium chloride has diminished. It is anticipated that the market for ammonium chloride will continue its current trend of consolidation in the short term.
❤Ammonium sulfate: The market for ammonium sulfate experienced mixed trends last week. Due to differences in the flow of supplies, the prices of hexane-grade ammonium sulfate remained high and stable, with a slight increase, but the prices of coke-grade ammonium sulfate continued to decline as Brazilian demand was weak and domestic buyers were cautious about purchasing. Given that the current international supply and demand dynamics have not changed, it is expected that the short-term market will remain stagnant with limited movement. Pay close attention to developments in the international situation.
❤Phosphate Fertilizer: The domestic market for monoammonium phosphate saw a strong and upward trend last week. The price of 55% powder from Hubei factories was around 4,200 yuan/ton. Production costs remained high, and many factories have continued to suspend orders. Additionally, plant operating loads have continued to decline, resulting in relatively limited available inventory for market circulation. Some traders have placed additional orders, but downstream demand is primarily driven by essential purchases. The market is expected to remain stable in the short term.
Last week, the domestic diammonium phosphate market continued to operate within a narrow range. Raw material prices remained high, and pressure on costs remained unchanged. Demand gradually decreased, and downstream operations maintained a rhythm of purchasing only as needed. The overall market trading atmosphere was subdued, with many operators exhibiting a cautious attitude. The market is expected to remain relatively stable in the short term.
❤Potassium fertilizer: The domestic potassium fertilizer market’s performance last week was relatively subdued. There was limited available stock in circulation, resulting in traders maintaining relatively firm pricing. It was difficult to find low-cost supplies, and high-priced supplies saw slower sales. The pressure on domestic sulfuric acid potassium fertilizer manufacturers regarding costs was evident, and the current factory selling price of sulfuric acid potassium fertilizer has remained stable.
❤Compound Fertilizer: The domestic compound fertilizer market performed relatively robust last week. Prices in some major production regions continued to rise. As of now, the mainstream factory price for 45% S (3*15) is around 3,350-3,600 yuan/ton. However, due to disarray in end-user retail prices and a decline in essential demand, new orders have been limited, leading to a stalemate in the market. Short-term attention should be paid to changes in the raw material side, while compound fertilizers remain in a period of high consolidation.
Morning. Urea prices adjusted lower on Fri following Straight of Hormuz developments (that continue to evolve, and remain fluid), but Nola mkts were particularly sold down, as April barges traded to new recent low of $610. Looking to refresh bids//offer after most recent events in M.East, but mkts framed Fri COB:
AG
Apr $810//$865
May $780//$830 – traded $815 Fri
Jun $720//$780
Cfr Brazil
Apr $750//$820
May $680//$760
Jun $655//$735
Jul $650//$710
Aug $640//$710
Egypt
Apr $820//$890
Brazil Amsul
May $255//$290
Jun $250//$290
Nola
Phys: Loaded traded $655; Apr $685, $665, $640, $630. Fh May $665, $655, $650, $645, $635, $615
Paper:
Apr $670//$700
May $625//$675
Jun $600//$645
Jul $480//$550
Aug $480//$550
UAN Nola
Apr $500//$540
May $500//$535
DAP Nola
Apr $720//$750
May $780//$800
June $700//$775
MAP Brazil
Jun $880//$910
Indorama to develop $525M phosphate fertilizers project in Egypt
The facility will be constructed on a 522,000 square meter site and is expected to create up to 2,500 roles during operations
The facility will be constructed on a 522,000 square meter site and is expected to create up to 2,500 roles during operations
Indorama Corporation announced the signing of a contract to establish a major phosphate fertilizers and chemicals complex in Egypt, with an initial investment of US$525 million.
The project, referred to as “Indorama Egypt Fertilizers,” will be developed within the Suez Canal Economic Zone in the Ain Sokhna Industrial Area. The signing ceremony was witnessed by Dr. Mostafa Madbouly, Prime Minister of Egypt, in the presence of Eng. Karim Badawi, Minister of Petroleum and Mineral Resources, and Walid Gamal El-Din, Chairman of the Suez Canal Economic Zone. The contract was signed by Mustafa Sheikhoun, Vice Chairman of the General Authority for the Suez Canal Economic Zone for Investment and Promotion Affairs, and Mukul Agrawal, Country Head – Egypt, Indorama Corporation.
The facility will be constructed on a 522,000 square meter site and is expected to create up to 2,500 roles during operations, in addition to approximately 500 job opportunities during the construction phase.
The first phase of the project will have a production capacity of up to 600,000 tons per year, focusing on phosphate fertilizers and a range of related inputs and chemical products. Approximately 80% of the output is expected to be exported, supporting Egypt’s position as a regional hub for industrial manufacturing and global trade.
Dr. Mostafa Madbouly stated that the project represents a qualitative addition to Egypt’s strategic industries, particularly in fertilizers and mineral resource-based sectors, and reflects the government’s focus on maximizing the value of natural resources and creating sustainable employment opportunities in line with the goals of comprehensive economic development.
Walid Gamal El-Din explained that the project reflects the success of the General Authority for the Suez Canal Economic Zone in attracting specialized industrial investments with high capital and technological intensity.
For Indorama Corporation, the investment aligns with its global growth strategy in downstream chemicals and fertilizers, while strengthening its presence in high-potential emerging markets.
*EU Carbon Tax at €75.36/ton Implemented: Chinese Enterprises' Carbon Costs Cannot Be Deducted, Exports Face New Challenges!
On April 7, 2026, the European Union officially announced the certificate price for the first CBAM (Carbon Border Adjustment Mechanism) collection period—€75.36 per ton of CO_2 equivalent. This marks the official entry of the world's first large-scale carbon border tax into its substantive taxation phase. At the same time, a recent report from the Institute for Global Decarbonization Progress (iGDP) clearly points out: compliance costs in China's carbon market are currently not recognized by the EU. Chinese enterprises will face a "double carbon burden" of "Domestic Carbon Costs + CBAM Certificates," posing unprecedented challenges for high-energy-consuming products exported to the EU.
### I. CBAM Officially Enters the Taxation Cycle: A Historic Moment
On January 1, 2026, after a two-year transition period, the EU Carbon Border Adjustment Mechanism (CBAM) officially entered the full implementation phase. On April 7, with the announcement of the first certificate price of €75.36/ton—directly anchored to the average Q1 auction price of the EU Carbon Market (EU ETS)—a "green barrier" that will completely reshape the global trade landscape has taken shape.
CBAM Core Mechanism at a Glance:
| Element | Content |
|—|—|
| Initial Price | €75.36/ton CO_2 equivalent |
| Pricing Basis | EU ETS quarterly auction average price |
| Update Rhythm | Quarterly in 2026; dynamic weekly adjustments starting in 2027 |
| First Settlement Date | 2027 (Settling 2026 import carbon emissions) |
| Covered Industries | Steel, Aluminum, Cement, Fertilizer, Electricity, Hydrogen (Six major sectors) |
| Expansion Expectations | Extending to steel/aluminum-intensive downstream products in 2028 |
| Exemption Threshold | Exempt if annual import volume < 50 tons (covers 99% of small importers) |
Current prices in the EU carbon market have reached approximately 708 RMB/ton, which is more than 9 times the price in China’s carbon market (approx. 77 RMB/ton). This chasm is the fundamental reason for the high CBAM costs faced by Chinese enterprises.
### II. Core Dilemma: Why Can’t Chinese Carbon Costs be Deducted from CBAM?
According to deep analysis from the iGDP report, the basic principle of the EU CBAM is to only recognize carbon pricing mechanisms that are "explicit, verifiable, and truly transmitted to product costs." China's carbon market currently faces two structural shortcomings, leading to a temporary lack of deduction eligibility:
*Shortcoming 1: Lack of a Total Cap Mechanism
China's national carbon market has not yet established a clear total emission cap and is still in the transition phase from "intensity control" to "total volume control." The EU ETS centers on strict total volume control, which is the key threshold for determining the "effectiveness" of carbon pricing.
*Shortcoming 2: Low Proportion of Paid Allowances
China has long relied on free allowances, meaning enterprise carbon emissions are essentially "zero cost." Although paid allowances were launched in April 2026 for power, steel, cement, and electrolytic aluminum—with an initial ratio of about 10%-15%—this is far below the EU’s auction ratio of over 90%, making it difficult to be recognized as a "substantive carbon burden."
> Consequences:
> 1. Chinese exporters must bear both domestic compliance costs and full CBAM certificate fees, creating a double carbon burden.
> 2. The EU has not yet released detailed rules for third-country carbon cost deductions (under Article 9, Paragraph 2 of the CBAM Regulation); this policy vacuum increases compliance risks.
> 3. If enterprises fail to establish a measured carbon accounting system, they will be forced to use punitive default values (including a 10%-30% markup). These markups are penalty gradients set by the EU; the later the submission, the heavier the penalty. Essentially, this forces companies to establish MRV systems and submit actual emission data.
>
### III. Six Major Industries: What is the Impact?
#### Steel Industry: CBAM costs account for 8.5%-9.5% of export value
*Average Carbon Intensity (China): 1.677 tons CO_2/ton of steel (higher than EU average, ranking 8th globally).
*Export Volume to EU (Jan-Nov 2025): 7.909 million tons, valued at €12.11 billion.
*EU Default Intensity for China: 1.826 tons/ton in 2026 (including 10% penalty), reaching 2.158 tons/ton after 2028.
CBAM Cost Projections:
| Scenario | Carbon Cost per Ton (€) | Total Annual Cost (€ Billion) | % of Export Value |
|—|—|—|—|
| Chinese Carbon Price Deductible | 129.48 | 1.024 | 8.5% |
| Chinese Carbon Price NOT Deductible | 145.38 | 1.150 | 9.5% |
*Case: For Baosteel, 2026 CBAM costs are estimated at ~150 million RMB/year, rising to 420 million RMB by 2030 and 780 million RMB by 2034.
*The "Green Power" Hurdle: The EU currently does not recognize China’s Green Electricity Certificate (GEC) system. Steel plants using green power cannot claim reductions in indirect emissions.
*Path Forward: Short-process electric arc furnace (EAF) steelmaking (emissions are 1/3 of blast furnaces) and hydrogen metallurgy are the most viable mid-to-long-term options.
#### Aluminum Industry: CBAM costs account for 2.9%-3.2% of export value
*Average Carbon Intensity (China): 1.977 tons CO_2/ton of aluminum (lower than the EU average due to recent improvements).
*Export Status: China is the largest source of EU CBAM aluminum imports.
*The Default Value Trap: The EU's default value for Chinese unrefined aluminum (7601) starts at 3.000 tons/ton, mark-up to 3.300 in 2026—far higher than actual intensity.
CBAM Cost Projections:
| Scenario | Carbon Cost per Ton (€) | Total Annual Cost (€ Billion) | % of Export Value |
|—|—|—|—|
| Chinese Carbon Price Deductible | 152.66 | 0.85 | 2.9% |
| Chinese Carbon Price NOT Deductible | 171.41 | 0.96 | 3.2% |
*Data Unfairness: While China’s actual intensity is 1.977, the EU default (3.000+) deviates significantly from reality.
*Path Forward: Shifting capacity to regions rich in wind/solar power (Yunnan, Sichuan) is critical, as electricity accounts for 72% of production emissions.
#### Cement Industry: CBAM costs account for 14.2%-15.9% (Highest Pressure)
*Economic Viability: Because cement has a low unit price but high process emissions (limestone calcination), the carbon tax almost wipes out export profitability.
*Complexity: Must report "embedded emissions" including precursors, which is more complex than steel or aluminum.
#### Fertilizer Industry: High Carbon Costs for Coal-based Production
*The Gap: China's coal-to-urea carbon footprint is 2.269 tons CO_2/ton, compared to 0.878 tons for EU-produced fertilizer.
*Dual Gases: Must report both CO_2 and Nitrous Oxide (N_2O). N_2O has a global warming potential ~298 times that of CO_2.
CBAM Cost Estimates (Base €75.36/ton):
| Product | Default Intensity (t CO_2eq/t) | CBAM Cost per Ton (€) | Carbon Cost (RMB Approx.) |
|—|—|—|—|
| Anhydrous Ammonia | 4.404 | 331.9 | ~2,530 RMB |
| Urea | 3.111 (est.) | 234.5 | ~1,790 RMB |
*Opportunity: This creates a strategic window for Green Ammonia. Since green ammonia emissions are near zero, it gains a cost advantage of over 1,000 RMB/ton over gray (coal-based) ammonia under CBAM.
#### Electricity Industry: Direct impact is negligible
There is no substantive cross-continental power trade between China and the EU. However, the *indirect impact is vital: industry-specific reporting of electricity-related carbon for steel and aluminum will penalize Chinese products due to China's higher grid emission factor (0.5618 kgCO_2/kWh).
#### Hydrogen Industry: Green Hydrogen enters a historic window
*Direct Coverage: Hydrogen (CN 28041000) has no small-amount exemption.
*The Cost Blow: Using the EU default value (29.304 tons/ton in 2026), the CBAM cost reaches €2,208/ton of hydrogen (~16,860 RMB). This exceeds the production cost of gray hydrogen itself.
*Strategic Advantage: CBAM is the first global policy lever to give Green Hydrogen a market advantage. China, with the world's lowest solar/wind costs, is poised to become a core supplier of green hydrogen to the EU.
### IV. New Energy Equipment Exports: Limited Short-term Impact, Long-term Risks
*Direct Impact: Currently Zero. PV modules, wind turbines, batteries, and inverters are not in the first batch of CBAM coverage.
*Indirect Risks:
1. Supply Chain Pass-through: Steel and aluminum used in turbine towers or PV brackets will carry CBAM costs, raising manufacturing totals.
2. 2028 Expansion: The EU plans to extend CBAM to steel/aluminum-intensive downstream products (machinery/auto parts).
3. Other Barriers: The EU Battery Regulation and Ecodesign for Sustainable Products Regulation (ESPR) will require carbon footprint disclosures for PV and batteries regardless of CBAM.
### V. Three Core Issues Unresolved: High Compliance Risks
1. Missing Deduction Rules: As of February 2026, the European Commission has not released official documents on how to calculate "paid" carbon costs in third countries.
2. International Carbon Credits: It is unclear if existing credits like CCER or VCS will be recognized. The EU is considering a max 5% deduction via Paris Agreement Article 6 credits, but details are pending.
3. Verification Shortage: There is a severe lack of EU-accredited verifiers. Companies failing to provide verified data risk being forced into the punitive default values.
### VI. Response Strategies: Differentiated Breakthrough Paths
| Industry | Short-term Priority (2026-2027) |
|—|—|
| Steel | Establish facility-level MRV; submit measured values; participate in national carbon market. |
| Aluminum | Pursue PPA/Green power certification; challenge EU default values. |
| Cement | Prioritize high-value exports; refine embedded emission accounting. |
| Fertilizer | Accelerate gas-to-coal transition; layout green ammonia capacity. |
| Hydrogen | Obtain EU-recognized certifications (ISCC, REDcert). |
| New Energy | Establish product carbon footprint databases; push for green supply chains. |
The Era of Carbon Costs Has Arrived.*
CBAM's €75.36/ton is not just a number; it is a signal that global trade has entered an era of carbon pricing. For Chinese enterprises, the key lies in turning passivity into initiative—building compliance foundations while using low-carbon competitiveness to reshape dominance in the global supply chain. Those who arrive late will undoubtedly pay a higher price.
Iranian urea producers have set this week’s new benchmark price at $770 per ton, marking a notable $20 increase compared to the previous week.
𝗧𝗵𝗲 𝘀𝘂𝗹𝗽𝗵𝘂𝗿𝗶𝗰 𝗮𝗰𝗶𝗱 𝗺𝗮𝗿𝗸𝗲𝘁 𝗶𝘀 𝗴𝗼𝗶𝗻𝗴 𝘁𝗵𝗿𝗼𝘂𝗴𝗵 𝗮𝗻 𝘂𝗻𝗽𝗿𝗲𝗰𝗲𝗱𝗲𝗻𝘁𝗲𝗱 𝗽𝗲𝗿𝗶𝗼𝗱. Supply and demand are disrupted by a range of factors, while logistics through the Strait of Hormuz remains largely blocked, with just one sulphur vessel transitting yesterday. This is contributing to a sharp rise in FOB, freight and CFR values.
The pressure is being felt by every participant along the supply chain.
I am still in China and did not attend #Cesco, but sulphuric acid was clearly the talk of the town. I have been asked the same questions repeatedly this week by those who attended, so I want to share my views.
𝚆̲𝚑̲𝚢̲ ̲𝚊̲𝚛̲𝚎̲ ̲𝚜̲𝚞̲𝚕̲𝚙̲𝚑̲𝚞̲𝚛̲𝚒̲𝚌̲ ̲𝚊̲𝚌̲𝚒̲𝚍̲ ̲𝚙̲𝚛̲𝚒̲𝚌̲𝚎̲𝚜̲ ̲𝚛̲𝚒̲𝚜̲𝚒̲𝚗̲𝚐̲?̲
FOB prices are moving higher, mainly due to China’s restrictions on sulphuric acid exports. The loss of Chinese acid is drawing sporadic tonnes into the spot market at very high prices. The US, India west coast, Europe and South Korea have all sold material.
Consequently, CFR price indications in Chile have moved higher. Upcoming spot deals are also expected to move up.
𝙰̲𝚛̲𝚎̲ ̲𝙰̲𝚏̲𝚛̲𝚒̲𝚌̲𝚊̲𝚗̲ ̲𝚌̲𝚘̲𝚙̲𝚙̲𝚎̲𝚛̲ ̲𝚙̲𝚛̲𝚘̲𝚍̲𝚞̲𝚌̲𝚎̲𝚛̲𝚜̲ ̲𝚍̲𝚘̲𝚒̲𝚗̲𝚐̲ ̲𝚠̲𝚎̲𝚕̲𝚕̲?̲
I saw a post here suggesting that consensus at Cesco was that the DRC is doing fine, with no acid shortages yet.
I know both the acid and DRC markets reasonably well, and I would say that statement is 𝗲𝘅𝘁𝗿𝗲𝗺𝗲𝗹𝘆 𝘄𝗿𝗼𝗻𝗴.
𝗧𝗵𝗲 𝗗𝗥𝗖 𝗶𝘀 𝗿𝘂𝗻𝗻𝗶𝗻𝗴 𝗼𝘂𝘁 𝗼𝗳 𝗮𝗰𝗶𝗱, 𝗮𝗻𝗱 𝗼𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀 𝗮𝗿𝗲 𝗮𝘁 𝗿𝗶𝘀𝗸 𝗼𝗳 𝗰𝗹𝗼𝘀𝘂𝗿𝗲.
Copper producers’ willingness to pay more for sulphur in the DRC than in other regions should not be mistaken for them being in a comfortable position. They do benefit from lower copper production costs and stronger end-product prices, but they also face acid shortages.
The country relies on acid from Zambia, where production has been depressed for an extended period, forcing the DRC to use more sulphur to produce its own sulphur-based acid.
Sulphur stocks in the DRC are dwindling, and any fuel shortage would immediately disrupt sulphur supply from ports such as Dar es Salaam, as well as copper and cobalt exports out of the DRC.
In addition, the Zambian government has recently announced a partial sulphuric acid export ban, requiring market participants to apply for export permits that may or may not be granted.
The DRC is highly complex. There are dozens of sulphur burners sourcing material from multiple ports located far from inland operations, each with different volumes and procurement methods. The system functions like a conveyor belt. When sulphur is abruptly removed, or effectively held up in the strait, the entire system breaks down. That is what we are dealing with now. The sulphur reported at very high prices is not arriving today, but only in the next one to two months.