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*Price of AO acid AN reaches 3-year high Author/Source: China Fertilizer Network Date: 11-05-2019 Clicks: 282 Since August, the market for AO acid AN has seen a strong upward trend, with prices rising from 1,967 yuan per ton to the current level of 2,300 yuan, representing an increase of 16.9%； Compared to the same period last year, it rose by 10.8%, reaching a new price level in almost 3 years. Decrease in effective production capacity Feng Jian, manager of Guangxi Hongchang Chemical Co., Ltd., said that the rise in the price of *ao acid an is closely related to the decrease in effective production capacity. In recent years, the industry related to *ao acid an has been increasing its efforts to eliminate outdated production capacity, with over 2 million tons of such capacity being phased out. Industry statistics show that by the end of 2018, the national production capacity for *ao acid an was 10.88 million tons, a decrease of 3.1% compared to the previous year. Not all of the capacities that were phased out belonged to small enterprises; some large companies such as Guangxi Liuhua also joined this trend of reducing production capacity. The company used to be the largest *ao acid an manufacturer in South China, with an annual production capacity of 350,000 tons of *ao acid an; it has now ceased production. Feng Jian said that *ao acid an is explosive, and regulations on it are becoming increasingly strict. Some old manufacturers of *ao acid an were located in remote areas, but with urban development, these sites have now become densely populated zones, posing significant safety risks. As a result, these companies face the option of shutting down, withdrawing from business, or moving to industrial parks. It is expected that production capacity for *ao acid an will further decrease in the future, which will provide strong support for the market for this product. Demand is increasing steadily. *AO acid has a wide range of application areas, including industrial and agricultural uses. In the industrial sector, it is primarily used for the production of civil explosives, accounting for 60% of the total demand for nitric acid. Liu Gong, the market director of Hunan Minxiang Chemical Co., Ltd., said that the market for civil explosives is closely linked to infrastructure investment. Due to the slowdown in economic growth, China’s GDP growth rate in the third quarter was 6%, the lowest level in many years. It is expected that in the fourth quarter, as local **special bonds continue to play a role, the growth rate of infrastructure investment will keep rising. With increased investment in infrastructure, demand for *ao acid an in the fourth quarter is expected to grow by around 5%. In recent years, the use of *ao acid an in the agricultural sector has been increasing. *AO acid is mainly used in the production of nitrate fertilizers. It is known that nitrate nitrogen can be directly absorbed by crops without the need for conversion, making it more rapidly effective. Especially for cash crops, nitrate fertilizers are highly competitive. “In developed countries, nitrate nitrogen accounts for over 30% of total nitrogen content, while this proportion is much lower in China; thus, there is great potential in the market for nitrate-based fertilizers. ”Liu Gong said. Furthermore, water-soluble fertilizers are developing very rapidly at present, which also presents a good opportunity for *ao acid an. Bai Youlu, president of the Chinese Society of Plants and Nutrition, believes that nitrate nitrogen fertilizers can still maintain high water solubility when combined with medium and trace elements, which is a major advantage of such fertilizers. From the perspective of plant nutrition, the combined use with other nutrients will be an important direction for the development of nitro fertilizers. Large export potential Since the beginning of this year, due to factors such as stricter export controls and weak international demand, the export situation for *ao acid in our country has been poor. Customs statistics show that in the first 9 months, China exported 133,000 tons of *ao acid an, a decrease of 60.4% compared to the previous year. However, there is significant potential for China’s exports of *ao acid an in the future, one of the major advantages being the resolution of Australia’s anti-dumping issues regarding this product. It is understood that Australia is an important exporter of *ao acid an to our country. In 2017, China exported 28,000 tons of *AO acid to Australia, accounting for 13.8% of the total export volume of *AO acid that year ； In 2018, the amount was 95,700 tons, accounting for 38.3% of the total. On June 25, 2018, the Australian Anti-Dumping Commission issued a statement announcing that it would initiate an anti-dumping investigation into *AO acid imported from China, Sweden, and Thailand. On October 24 of that year, the committee issued a preliminary affirmative ruling, deciding that as of October 25, 2018, an anti-dumping duty of 39.5% would be imposed on imports of *ao acid an from Chinese companies. Through our persistent efforts, on June 3 this year, the Australian Anti-Dumping Investigation Commission released its final decision, imposing a symbolic anti-dumping duty of only 0.3% on imports of our country’s *ao acid an; this provides some support for our country’s export market for *ao acid an. High raw material prices *The price of AO acid used to remain below 2,000 yuan for a long time, but it has now risen to around 2,300 yuan, reaching a high level. Liu Gong believes that, based on the trend in raw material prices, it is expected that the price of *ao acid an will remain at high levels in the coming period. Affected by factors such as a decline in operating rates earlier on, the price of nitric acid—the raw material for *ao acid an—has seen a significant increase. The rise has generally exceeded 300 yuan per unit, with some instances reaching as high as 500 yuan. As a result, manufacturers have raised their ex-factory prices to between 2,350 and 2,600 yuan. *Although the price of another raw material for AO acid, namely liquid ammonia, fluctuates frequently, it generally remains within the high range of 2600 to 3000 yuan, which all helps to support the cost of AO acid.