Shares of domestic potash producers advanced yesterday on speculation the government may lift price control on the nutrient that is used to boost crop yields.

The government has always been looking at lifting the price control although there is no timetable to do so, the China Securities Journal reported yesterday, citing a source at the National Development and Reform Commission.

Fertilizer prices are regulated in China to shield the farming industry, leaving some producers unprofitable in the face of surging raw material costs.

The newspaper said the NDRC has proposed that the government give direct subsidies to farmers in return for lifting the price control on potash. The move to lift price control could lead to the government easing price curbs over other fertilizers in the future, analysts said.

Shares of potash producers rose yesterday on the news while the Shanghai Composite Index tumbled 3.43 percent.

Xinjiang Guannong Fruit & Antler Co surged 7.23 percent to 71.23 yuan (US$10.4) while Inner Mongolia Lantai Industrial Co rose 1.13 percent to 11.59 yuan after soaring as much as 6.46 percent.

China relies on imports for 70 percent of its potash needs, industry officials told the First 2008 World Potash Conference in Shanghai last week.

Potash prices may almost double to US$900 a metric ton, excluding freight costs, over the next two to three years, Paul Matysek, chief executive of Canada's Potash One Inc, said at the conference, as potash makers have found it hard to match global demand.

(Shanghai Daily July 16, 2008)