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Ammonium chloride: Prices falling on purpose, demand remains weak. Author/Source: China Fertilizer Network. Date: 2019-09-25. Clicks: 11. What has been most disturbing recently is the weak market for ammonium chloride, to the point that people avoid talking about it. While the editor doesn’t want to spread pessimistic sentiments, it’s still necessary to face reality. Factory inventory is limited, prices continue to fall, and guaranteed price policies are increasingly being adopted across the market. The deadline for settling payments under these guaranteed prices is at the end of November or December, or even until the end of February next year. Of course, if ammonium chloride prices rebound during this period, it’s possible that some companies will stop offering such guarantees; but until then, these guaranteed prices remain in effect, which undoubtedly exacerbates the pessimistic outlook among suppliers and customers regarding the current market situation. Upstream players intend to lower prices; however, whether it’s because the market prefers buying at rising prices rather than falling ones, or out of caution and hesitation, buyers simply refuse to respond. This truly exemplifies the saying, “Prices may be lowered intentionally, but demand remains indifferent.” Currently, the price of ammonium chloride in markets across various regions continues to decline. For instance, in the Central China region, the prevailing ex-works price is around 680–700 yuan per ton. Of course, prices for certain guaranteed orders are negotiated separately ； In some areas of Shandong, the quoted price for dry ammonium entering warehouses is around 700 yuan per ton ； In Jiangsu region, the prevailing ex-works prices for wet ammonium sulfate are around 560-600 yuan per ton (negotiable) ； In the southwestern region, the price of dry ammonium at the ports is around 680–700 yuan per ton; deals are generally made on a case-by-case basis. For detailed prices from various manufacturers, please visit the member area of China Fertilizer Network. Moving forward, to determine how the ammonium chloride market will evolve, we must pay attention to the following factors. First, there is little likelihood of a reduction in the supply side, and enterprises continue to operate at high utilization rates. With the upcoming National Day holiday and the fact that environmental inspections remain stringent across various regions, production levels at ammonium chloride manufacturers are remaining high ； Ammonium chloride producers in Henan, Jiangsu, and Anhui provinces have largely resumed full-capacity production. According to statistics from China Fertilizer Network, the overall operating rate of soda ash-ammonium chloride producers currently stands at 78.59%. Previously scheduled maintenance plans for several major ammonium chloride manufacturers in Jiangsu Province have also been postponed; for now, no ammonium chloride producer has announced any maintenance plans. The production situation during the National Day holiday remains unclear as well ； Additionally, current soda ash producers are pinning their hopes on soda ash. Although the rise in soda ash prices has come to a halt, it still performs better than ammonium chloride. Therefore, these companies will continue to maintain high levels of soda ash production. Consequently, it will be difficult for ammonium chloride production to decline as well ； Another matter of concern is the progress regarding the restart of the ammonium chloride production facility at a factory in Dalian, in the Northeast. According to the factory, it aims to resume operations after November; if this happens successfully, it will help to reduce the reliance on imported supplies for winter storage in the Northeast. However, it is necessary to keep an eye on when operations will resume. Second, demand was already weak, and the safeguard policy exacerbated bearish sentiment. It is the off-season, and although the guaranteed price policy provides some reassurance, large traders still proceed with cautious purchasing. Smaller traders, considering profits and potential risks, purchase even less. Moreover, some traders have ample supply available to them ； Fertilizer manufacturers have launched high-demand products, but their enthusiasm for production is low. Additionally, the National Day holiday is likely to result in restrictions on fertilizer production in some areas, which poses risks to the delivery schedule of ammonium chloride ； Additionally, the guaranteed price policies in various regions serve as a reassurance for downstream manufacturers; with sufficiently low guaranteed prices and a long enough period of coverage, these manufacturers are more willing to make purchases. As a result, the pressure shifts from upstream to downstream. This favorable situation also leads to fewer large-scale purchases in some markets, especially in the Northeast region, which is of particular interest – there is little activity there, and downstream manufacturers are cautious in their purchasing decisions. As more guaranteed purchase orders are issued, although companies remain keen on the Northeast market, the gap in demand there is gradually shrinking. Third, the impact of urea varies due to certain variables. In this latest bidding process, urea in our country still failed to secure orders. Domestic market demand is weak; most of the urea available on the market has no buyers. Industrial purchases are limited, yet urea production facilities remain operating at high capacity. Under these conflicting conditions, the price of urea declined. However, when comparing prices alone, urea is still more expensive than ammonium chloride, which serves as a form of support – but only to a limited extent. Overall, if ammonium chloride manufacturers do not reduce their production levels, market conditions are likely to remain sluggish. Moreover, some factories might lower prices in an effort to secure orders, despite having fixed order commitments; while price cuts may be intended, demand remains unforgiving. (Tan Junying)