Some key Chinese firms have suspended fertiliser exports from the country in what looks like a temporary ban. The idea behind the move is to address the higher raw material prices, higher fertiliser prices, and ensure there is enough domestic availability.

China's National Development and Reform Commission (NDRC) said it had summoned fertiliser firms for a discussion against hoarding and speculation, though it did not mention the names of the companies.

The move is the latest by Beijing to tackle the soaring prices of major raw materials.

Fertiliser prices in China, have hit record highs this year amid strong overseas demand, lower current domestic production and high energy costs. China is both a major consumer and producer of fertilisers. In fact, India depends highly on China for urea imports.

Looking at the data that has come in from the fertiliser ministry’s annual report, India imports around 25 percent of its urea consumption; 90 percent of phosphates that are DAF fertilisers, and 100 percent of Potash. Out of these, around 30-35 percent of imports come in from China.

Urea futures prices on China's Zhengzhou Commodity Exchange have surged by over a third since the start of the year. They hit record highs of 2,616 yuan per tonne on Thursday but eased 2.7 percent on Friday.

Spot urea prices also soared to 2,814 yuan in early July, according to China's National Bureau of Statistics, up from 2,674 yuan a month ago.

NDRC's action follows comments from Premier Li Keqiang last month that drew attention to how high prices of key farm inputs are a potential threat to the country's food security.

It said on Friday it had urged key fertiliser companies to "operate in an orderly manner and not hoard, drive up prices, or fabricate or spread information about price increases."

Watch the accompanying video of CNBC-TV18’s Sonal Bhutra for more details.

-- With inputs from Reuters

(Edited by : Dipika)

First Published:Jul 30, 2021 12:52 PM IST