Ammonium chloride: Will there be widespread plant shutdowns in August?

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Ammonium chloride: Will there be widespread plant shutdowns in August? Author/Source: China Fertilizer Network Date: 2019-08-05 Clicks: 16 Looking at the current market conditions for nitrogen fertilizers, phosphorus fertilizers, potassium fertilizers, and compound fertilizers, industry experts likely believe that ammonium chloride is superior; firstly, it is easier to handle, and secondly, its price has continued to rise slightly in some areas, which is something that industry professionals are quite pleased about. Currently, the ammonium chloride market in China is showing positive trends, with prices remaining high and experiencing slight increases in some areas; for example, in regions such as Jiangsu and Chongqing, prices rose by 10–20 yuan per ton this week. In other areas, prices remained stable at high levels. According to statistics from China Fertilizer Network, as of now, the average ex-factory price for wet ammonium chloride is around 520–630 yuan per ton, while the average ex-factory price for dry ammonium chloride is around 680–750 yuan per ton. There is some room for negotiation when concluding deals. For detailed prices in various regions, please visit the member section of China Fertilizer Network. 　　Currently, manufacturers remain fairly optimistic about the trend of ammonium chloride prices. Of course, the main factor supporting this optimism is the fact that some large manufacturers will enter a phase of reduced production or suspension of operations in August, and such widespread shutdowns will further strain the supply of this product. So what are the factors that will influence the future trend of the ammonium chloride market? 　　On the one hand, the operating rate of ammonium chloride manufacturers is on a downward trend. According to statistics from China Fertilizer Network, as of now the overall operational rate of the caustic soda industry is 76.7%. At present, the production capacity of some ammonium chloride manufacturing plants in Henan Province is slightly lower, and one large-scale factory may need to shut down certain of its units for maintenance due to environmental regulations and the upcoming national sports events in the area; this could result in a reduction in daily production of around 2,500 tons ； Some ammonium chloride manufacturers in Jiangsu plan to reduce their production capacity by half starting from the 5th, or to shut down for maintenance for about 7-10 days ； A factory in Anhui plans to carry out maintenance work starting from the 10th, for about 15-20 days ； A large factory in Hubei region also plans to carry out maintenance work around the middle of the month ； A factory in Shaanxi also has maintenance plans ； In addition, under the dual pressures of environmental protection and safety, some small ammonium chloride factories in the southwest region were affected, resulting in a decrease in their operational rates that lasted for nearly a month. If these companies carry out maintenance as scheduled in the future, the overall operational rate of the caustic soda industry could be less than 60%, leading to another shortage in supply; as a result, some factories will take on orders on a limited scale. 　　On the other hand, the export market is in good shape, providing sufficient support for the domestic market. According to customs data, in the first half of last year, China’s total exports of ammonium chloride for use as fertilizer amounted to 428,800 tons, while the total exports of nitrogen-phosphorus compound fertilizers were 468,800 tons. In the first half of this year, the total exports of ammonium chloride for fertilizer use were 403,300 tons, and the total exports of nitrogen-phosphorus compound fertilizers were 569,200 tons. Additionally, the exports of ammonium chloride in pellet form also helped to reduce the sales pressure in the domestic market. Given the tight supply situation in the domestic market, the international market continued to provide support for it. 　　Finally, there are considerations regarding demand. Currently, the price of ammonium chloride is high; small and medium-sized traders are resistant to such high prices and are concerned even if there are price increases. Meanwhile, some large traders have limited purchasing volumes due to low profits ； The operating rate of compound fertilizer plants is slowly recovering. Although raw material stocks are limited, constraints related to environmental protection and safety prevent the outdoor storage of these materials; as a result, the volume of purchases of various raw materials for fertilizer production is currently limited. However, this also indicates that demand for ammonium chloride is likely to be positive in the future, offering positive long-term prospects. At present, winter storage in the Northeast market has not yet begun, and the enthusiasm on the downstream side has not been stimulated; a few factories have started to provide quotes while the downstream parties are waiting to see what will happen. However, activities should gradually get underway by the end of this month or early next month, so there is considerable expectation ； The urea market is weak, with prices continuing to fall; most manufacturers hold pessimistic views. As urea prices drop, there is less support for ammonium chloride prices as well. 　　Overall, considering the future operating status of these caustic soda manufacturers, there will be widespread shutdowns in August, which will provide strong support for market prices. Under these favorable conditions, it is expected that ammonium chloride prices will remain high, with even slight increases in some areas ； However, due to retailers’ resistance to high prices and the lack of centralized purchasing, factories should proceed cautiously, adopting a gradual approach. 　　(Tan Junying)