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Ammonium chloride shows stability with a tendency to rise – maintain this pace. Author/Source: China Fertilizer Network Date: 12-09-2019 Clicks: 113 As the end of the year approaches, the domestic fertilizer market is entering a period of intense final preparations; some sectors remain calm, while others show signs of activity. Currently, the market for phosphatic fertilizers, potassic fertilizers, and compound fertilizers is weak; only nitrogen fertilizers are performing somewhat better, and by these we mean urea and ammonium chloride ； The domestic urea market is showing signs of improvement amid a stalemate; prices have risen by 30–50 yuan per ton, with some areas seeing increases of up to 100 yuan per ton, thus alleviating the sluggish atmosphere in the market ； Meanwhile, the rise in urea prices has also had a positive impact on the ammonium chloride market. Currently, the domestic ammonium chloride market is generally stable and showing signs of improvement. As support policies are gradually phased out, prices have stopped falling and stabilized. Some companies are taking action to raise prices slightly; for example, the average ex-plant price of dry ammonium chloride in the Northeast region has increased by 30 yuan per ton, reaching 550 yuan per ton, while the ex-plant price of wet ammonium chloride in Ningxia has risen to around 300–330 yuan per ton. Currently, there are different opinions within the industry regarding the market situation for ammonium chloride. Some believe that the ammonium chloride market can turn around, and that any signs of improvement should be capitalized on by maintaining this positive trend ； Another view is that ammonium chloride still has a tough road ahead before the Spring Festival, and prices might come to a halt at that point. Regardless of which theory holds true, an analysis from aspects such as supply and demand is still necessary. On the one hand, the operating capacity of caustic soda manufacturers remains at a relatively high level. According to statistics from China Fertilizer Network, the overall operational rate of domestic caustic soda production enterprises is around 82.46%. In fact, such a production level is not unusual this year; so far, aside from a few ammonium chloride production plants in North China, Northwest China, and East China that are operating at lower capacity or have stopped production, the rest of the plants are operating at over 80% capacity or even at full capacity. Moreover, no companies have indicated any plans for maintenance in the near future, so the operational rate of caustic soda production enterprises will remain high ； Meanwhile, some large manufacturers still have a certain amount of inventory that needs to be cleared, so they will not act rashly. If production levels remain unchanged, a daily output of just over 40,000 tons is already enough to cause problems for these companies, not to mention the inventory levels held by companies in the upstream and downstream sectors. Based on these production figures, ammonium chloride manufacturers will continue to face pressure, and the situation is not likely to improve quickly. On the other hand, the volume of ammonium chloride sold has increased, which means that demand from downstream users has improved; this is also the key factor that has prevented the decline in the ammonium chloride market. Winter storage, which has received considerable attention, is now on the agenda, particularly regarding procurement activities in the Northeast and North China regions; there has been an increase in the volume of ammonium chloride sold ； The operating rate of compound fertilizer manufacturers has slowly risen to around 45.13%, and before the Spring Festival, these companies are likely to stockpile ammonium chloride, the raw material needed for producing compound fertilizers and extruded granular ammonium chloride. Another factor that must be mentioned is soda ash: its market is weak and shows no sign of improvement at present, with prices falling to low levels. Companies involved in the production of combined alkalis face significant pressure related to their costs per two tons of product. It is possible that some of these companies are already selling at prices close to or even below their cost levels; thus, for them, this represents a bottom point, and raising prices has become an urgent priority for them. Furthermore, the increased price of urea has a significant positive effect on ammonium chloride. Over the past week, urea prices have continued to rise. Although the pace of increase has slowed down and the market appears stuck, favorable factors such as limited natural gas supply, environmental and safety inspections, and moderate purchasing by downstream users will support relatively strong urea prices for some time to come. This is definitely a pleasant surprise and a benefit for low-cost ammonium chloride; after considering the costs, some compound fertilizer manufacturers will likely choose to use ammonium chloride in place of some of the urea. Overall, improved demand, bottomed-out costs, and the support provided by urea are all advantages for ammonium chloride manufacturers ； However, as some ammonium chloride manufacturers and downstream traders still have inventory to process, it is difficult to reduce production levels. Purchases by downstream customers ahead of the Spring Festival are likely to be limited; therefore, it is not yet the right time for an increase in ammonium chloride prices. It is expected that the ammonium chloride market will remain stable in the short term, before any upward trend can emerge. Nevertheless, it is certainly wise to maintain a steady pace. (Tan Junying)