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In response to growing concerns over price stability, the Chinese government has taken decisive steps to regulate key industries and prevent market manipulation. On January 9, Premier Wen Jiabao chaired a State Council executive meeting focused on maintaining stable prices, particularly in sectors such as energy and agriculture. The meeting emphasized that the prices of refined oil, natural gas, and electricity would remain unchanged in the near term, while the prices of essential fertilizers like urea and phosphate should also be kept stable.
The session also announced amendments to the "Provisions on Administrative Penalties for Price Violations," aiming to strengthen penalties for illegal activities. This includes stricter measures against industry associations that collude to manipulate market prices, ensuring greater accountability among operators.
Earlier, the National Development and Reform Commission issued an emergency notice urging local authorities to conduct immediate inspections of liquefied gas prices and crack down on any illegal price hikes. These actions are part of a broader effort to stabilize essential commodity markets ahead of the Spring Festival, with special inspections planned for critical items such as liquefied gas and agricultural fertilizers.
The State Council also stressed that any adjustments to fertilizer prices due to rising production costs must be approved by the government's price authority. This move aims to prevent arbitrary price increases and ensure transparency in the market.
According to the China Nitrogenous Fertilizer Industry Association, the decision to freeze electricity prices is a positive development for fertilizer producers. In 2007, significant increases in coal and electricity costs led to higher production costs, with coal prices rising by 8.03% and electricity by 7.32%. These increases pushed up the cost per ton of urea by over 100 yuan, causing financial strain on nitrogen fertilizer companies.
Moreover, Shanxi, a major coal-producing province, had already issued directives in November 2007 requiring coal enterprises to allocate funds for environmental restoration and ecological protection. This further suggests that coal prices are expected to rise in 2008, adding pressure on the fertilizer industry.
Fertilizer companies have expressed support for the government’s decision to hold off on price increases for oil and gas-based fertilizers. They have pledged to maintain stable pricing for urea and phosphate fertilizers, absorb rising costs where possible, and ensure adequate supply for spring farming. These efforts reflect a commitment to both economic stability and agricultural productivity.