Companies are delaying maintenance work; ammonium chloride prices must fall further

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Companies are delaying maintenance work; ammonium chloride prices must fall further. Author/Source: China Fertilizer Network. Date: 2019-08-20. Clicks: 43. First of all, the editor would like to point out that some websites or public platforms merely reproduce the original articles from China Fertilizer Network, but they alter the titles of these articles in a misleading manner. As a result, the original meaning of the articles published on China Fertilizer Network is altered, leading to confused or even inaccurate information being spread in the market. Therefore, we urge everyone who follows China Fertilizer Network to obtain its original content through legitimate channels. Back to the topic at hand: recently, urea, which had previously been weak in price, has seen a slight increase. Whether this is due to speculation or not, most traders in various markets are not optimistic about this trend, believing that urea prices will still inevitably decline. At this time, the ammonium chloride market was also experiencing weakness. The prices quoted by factories to external parties (note: these are the prices used for marketing purposes on information platforms) appeared firm, but they were actually overstated; the actual transaction prices kept dropping. Currently, there is still a slight difference in the prices of wet ammonium and dry ammonium in the domestic market; the price of wet ammonium is slightly higher than that of dry ammonium. However, if the prices of dry ammonium continue to fall, wet ammonium will inevitably be affected as well. Currently, the mainstream ex-plant price for dry ammonium in some areas of Central China is around 680–720 yuan per ton, but the actual price upon arrival at the factory is around 710–720 yuan per ton ； In the East China region, the standard ex-factory price for wet ammonium is around 600–650 yuan per ton, with discounts available upon transaction; whereas the standard ex-factory price for dry ammonium is 720–750 yuan per ton. The actual transaction price has dropped to slightly above 700 yuan per ton. For most supplies of dry ammonium delivered to the Shandong market, the arrival price is around 750 yuan per ton ； The ex-plant price of anhydrous ammonium in North China remains firm at 720 yuan per ton, but with a trend toward increased production, there is a risk of price declines. The overall operating level of caustic soda manufacturers remains high, offering little support. Originally, some ammonium chloride manufacturers within this month said they would carry out maintenance work. However, according to the latest updates, these factories have decided to postpone such maintenance until the latter part of the month or mid-next month. Moreover, a few ammonium chloride manufacturers in the North China and East China regions that were undergoing maintenance will resume operations by the end of the month. This means that the overall operational rate of the alkali industry will continue to rise; according to statistics from China Fertilizer Network, it has already risen to 76% as of now, and it is likely to remain at this level or higher in the short term. There are no signs of improvement in terms of factory shipments ； However, in the long term for September, if ammonium chloride manufacturers carry out maintenance as scheduled, their operating rates will decline. With weak demand, the market value might be depleted in advance. Firstly, affected by Typhoon Lekima, compound fertilizer manufacturers in certain areas of East China were forced to suspend operations temporarily or reduce their production rates ； Secondly, as a result of environmental and safety inspections, some small and medium-sized compound fertilizer manufacturers have been forced to reduce or cease production; this is particularly evident in regions such as East China, Central China, and Southwest China. For large compound fertilizer producers, procurement processes continue as usual, and they tend to choose urea as a raw material; moreover, the raw materials cannot be stored outdoors ； Thirdly, with the 70th anniversary celebration approaching, the production of fertilizer and chemical enterprises in the surrounding areas will inevitably be restricted. According to some ammonium chloride manufacturers in Shaanxi province, starting in September, the compound fertilizer manufacturers in the vicinity were forced to reduce their production or even cease operations ； Fourth, in recent years, traders and enterprises have shown little interest in stockpiling during the off-season. There is a considerable demand for wet ammonium in the production of autumn fertilizers, but the situation is complicated by the premature depletion of market supplies; dry ammonium is hard to come by. Moreover, stockpiling efforts in regions such as the Northeast and Northwest have not yet begun – not only is it still too early, but prices have not yet reached their lowest levels either. As a result, end-users are unwilling to make purchases, which forces companies to reduce their prices. Unfortunately, the weakness of urea results in weak support for ammonium chloride. Although, starting from this Wednesday, a few urea manufacturers in Shandong and Hebei raised their urea prices by 10–40 yuan per ton, contrary to the usual trend, this did not cause a major stir. Traders remained rational, taking market factors into consideration; they generally believed that this slight increase in urea prices was due to speculation and would be short-lived, thus having little impact on the price of ammonium chloride. Overall, there are more negative factors than positive ones in the ammonium chloride market, which is why prices have declined. Although some companies are reluctant to \"admit\" that prices have fallen, this does not change anything. Given the off-season conditions, the high production levels of ammonium chloride manufacturers, low prices of urea, as well as environmental regulations and restrictions related to the \"parade blue\" theme, which affect the operations of companies that produce raw fertilizers and compound fertilizers, it is expected that dry ammonium chloride prices will continue to fall slowly. Although wet ammonium chloride remains relatively stable, it cannot withstand the long-term negative impact of falling prices for dry ammonium chloride. (Tan Junying)