There is still a chance in autumn; the industry remains bullish

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There is still a chance in autumn; the industry remains optimistic. Author/Source: China Fertilizer Network Date: 2019-07-22 Clicks: 10. Recently, the price of monoammonium nitrate has remained stable, and companies continue to fulfill existing orders. Even though a large factory in Sichuan is shut down for annual maintenance, this does not prevent it from making deliveries as usual. It is reported that there are still tens of thousands of tons of orders waiting to be shipped, and they are being sent from warehouses to downstream factories one after another. Although the market for monoammonium nitrate is somewhat sluggish at present, companies are not under much pressure for now. Currently, the actual ex-plant price for 55% ammonium sulfate produced by large manufacturers in Hubei is between 2,000 and 2,050 yuan per ton (the same unit is used throughout). The actual ex-plant price for 58% ammonium sulfate in Hubei is around 2,150 yuan per ton. Large manufacturers in Sichuan sell 55% ammonium sulfate at 1,900–1,950 yuan per ton, while those in Henan sell it at 2,000 yuan per ton or slightly more. Although the volume of transactions at these higher prices is currently low, the overall trend is one of slight increases followed by stability in the prices of ammonium sulfate, which is certainly a positive development. 　　So, is there still a chance for an increase in the price of monoammonium? Recently, some industry insiders believe that there is a chance for an increase in the price of monoammonium. They argue that the overall operating rate of monoammonium production is lower than in previous years, which will lead to difficulties in shipping during the peak seasons to come. The author provides the following brief analysis on this issue. 　　To assess the performance of the ammonium sulfate market, it is essential to first pay attention to the demand for it. With weak demand, and even though supply and raw material costs are favorable, it is difficult for the price of ammonium nitrate to rise. Although the prices and policies related to high-phosphorus compound fertilizers for winter wheat have not yet been fully clarified, the collection of payments for these popular compound fertilizers has already been completed. It is reported that large fertilizer manufacturers in provinces such as Hubei, Henan, and Shandong are currently producing these popular products; one of the large manufacturers in Hubei plans to allow distributors to pick up their orders starting in August, though there is a possibility that this timeline may be slightly delayed. Fertilizer companies are experiencing rapid consumption of raw materials, and as finished products are shipped out and raw materials are used up, these companies are gradually restoring their inventory levels. This should lead to an improvement in the procurement of ammonium phosphate as a raw material in the future. It is reported that large fertilizer manufacturers in Henan still need around 50,000 tons of powdered ammonium phosphate, while other large manufacturers require more than 10,000 tons. Some smaller and medium-sized enterprises that did not make purchases earlier are likely to have purchasing needs in the future. Therefore, although demand for monoammonium appears to be relatively low at present, there is still ample time for purchases in the future, and there remains a solid underlying demand. 　　Secondly, attention should be paid to the supply side. First, the overall operating rate of ammonia production facilities has remained low so far this year, around 50% on average. Many large ammonia producers are in a state of prolonged production cuts or reduced output, with few operating at full capacity. Some smaller plants have been shut down for extended periods due to issues such as cash flow problems and environmental and safety inspections. Second, ammonium sulfate manufacturers are not under much inventory pressure at present; even if there is a significant amount of inventory, it mainly consists of ammonium sulfate that is ready to be shipped. Most companies have low inventory levels with more stock available for shipment. In some cases, the amount of product ready for dispatch can last until August. It is expected that by the end of this month, some companies that have been restricting new orders will introduce new prices for such orders. 　　Another point worth noting is that this year marks the 70th anniversary of the country’s founding; transportation in various regions may be subject to varying degrees of restrictions, which could affect shipping processes. Additionally, there are difficulties associated with shipping during peak seasons, and these factors contribute to an increase in the price of ammonium nitrate. 　　In summary, raw material sulfur prices have continued to fall and are expected to stay low in the near term. Liquid ammonia prices are also at low levels, which puts pressure on the costs associated with producing ammonium sulfate. However, given the steady demand in the future, as well as factors related to supply and delivery, there are some positive factors for ammonium sulfate prices. There is a chance that prices will rise in the future, but most experts believe that the increase will be smaller than in previous years. In any case, a stable or slightly rising price trend for ammonium sulfate can be considered a good thing. 　　(Zhao Hongye)