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2. UREA EXPORTS AND IMPORTS RISING.

The country's exports of urea rose again by 35.4% from 1.52 million tons in 1998 to 2.05 million tons in 1999. The export value, however, rose only by 3.6% as the export price dropped from an average of US$105 per ton (CIF) in 1998 to US$80.31 in 1999.

The increase in the exports in 1999 was attributable to the government policy of abolishing fertilizer subsidy in December 1998. The decision sent the price of fertilizer higher forcing farmers to reduce their fertilizer consumption. As a result stoks swelled in 1999 forcing producers to dispose them of in international markets although with a lower price.

As a strategic commodity to support the program of food self sufficiency, the distribution priority for urea is on the domestic market. Exports are allowed when the domestic requirement has been fully met. When exports surged, the government banned producers with the exception of PT Asean Aceh Fertilizer, from exporting that commodity late July, 2000. The policy was to guarantee supply ahead of the planting season in the country in October. But before October, the government already relaxed the restriction allowing exports up to 300,000 tons. The policy followed negotiations between the government and state-owned fertilizer producing companies. Producers generally opposed the policy as it would affect market confidence they have developed with difficulty abroad. Therefore, even if the government has lifted the ban, it is not easy for producers to regain the confidence already lost

Table - 1 Indonesia's exports of urea, 1995-2000
Year Volume (000 'tons) Value (US$ '000)

1995 1,328 275,431
1996 1,260 269,213
1997 2,088 308,217
1998 1,516 159,117
1999 2,052 164,804
2000(*) 814 79,749



(*) January - May; Source: CBS/Data Consult

Exports to Vietnam the largest

The main buyer of fertilizer from the country in the past several years has been Vietnam. Exports to that country increase from year to year. Vietnam has become one of the largest suppliers of rice in the world beside Thailand and the United States.

Official data at BPS showed in 1999, that Vietnam, which has continued to intensify efforts to develop its agriculture, imported 977,000 tons of urea from Indonesia or 47.6% of Indonesia's total exports. In 1998, exports to that country rose to 986,506 tons or 65.1% of Indonesia's total exports.

Table - 2 Urea exports by countries of destination, 1997-1998
Country of destination 1998
 (tons) (US$ '000)

Vietnam 986,506 104,566
Malaysia 82,458 8,622
Philippine 56,794 5,768
Myanmar 15,000 1,580
Thailand 67,400 7,367
Japan 40,312 4,329
Srilangka (Ceylon) 28,500 2,959
South Korea 100,850 10,154
China 20,000 2,070
India 52,007 4,957
Others 179,321 18,281
Total 1,515,560 159,117

Country of destination 1999
 (tons) (US$ '000)

Vietnam 976,627 86,708
Malaysia 137,314 11,931
Philippine 298,385 24,365
Myanmar 68,455 6,293
Thailand 130,067 16,991
Japan 69,651 6,209
Srilangka (Ceylon) 47,500 4,132
South Korea 102,990 9,084
China 30,750 2,556
India - -
Others - -
Total 2,051,746 164,804



Source: CBS/Data Consult

Urea production up again

Until 1997, Indonesia's urea production rose rapidly with an expansion of capacity by a number of producers. In the past 5 years, Indonesia's production of urea has grown 1.8% annually - from 5.89 million tons in 1995 to 6.33 million tons in 1999. The highest annual increase was 11.5% in 1995 following the operation of new units of PT Petrokimia Gresik and Pusri 1B.

Urea factories have operated at full capacity. In 1998, they even operated over their capacity such as ASEN Aceh Fetilizer operating at 100.5% of its installed capacity and Iskandar Muda at 106%. Altogether, the industry operated at 90.7% its installed capacity in 1999.

Table - 3 Indonesia's production of urea, 1995-1999
Year Production Growth
 ('000 tons) (%)

1995 5,894.7 -
1996 6,199.9 5.2
1997 6,293.6 1.5
1998 6,151.7 -2.3
1999 6,327.2 2.9
Average growth 1.8



(*) Semester I

Source: APPI/Department of Industry and Trade/Data Consult

In order to meet the growing demand for urea in the country, in addition to a new unit of Kaltim IV, which already operational in 1999, two new production units of Kujang 1B and Iskandar Muda II each with an annual capacity of 570,000 tons have been planned. But the economic crisis forced a delay in their construction.

Imports surging but remaining small in contribution

Imports of urea have remained small although surging to 143,000 tons valued at US$ 20.64 million in 1999.

Table - 4 Indonesia's imports of urea, 1995 - 2000
Year Volume Value
 (tons) (US$ '000)

1995 18 37
1996 55 66
1997 8,154 1,997
1998 378 711
1999 142,777 20,639
2000(*) 12,398 1,516



Source: CBS/Data Consult
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Comment:2. UREA EXPORTS AND IMPORTS RISING.
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Oct 10, 2000
Words:842
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