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Lower urea prices: an attempt to cover up the truth. What lies ahead for ammonium chloride? Author/Source: China Fertilizer Network Date: 2019-12-23 Clicks: 98 As the New Year approaches, various fertilizers are competing fiercely to meet their goals by the end of the year; some are striving to increase sales, while others are trying to boost prices. The situation regarding nitrogen fertilizers is dynamic, phosphorus fertilizers remain in a state of weakness, potassium fertilizer sales are poor, and there is competition among compound fertilizers. It’s hard to say who will ultimately win in terms of winter stockpiling. At present, with the resumption of urea production and moderate demand, prices have dropped slightly in many areas. The rumors regarding price fixes are something that the market is already accustomed to; trying to manipulate prices by such fixes seems like an attempt to cover up the truth. However, within the nitrogen fertilizer sector, ammonium chloride stands out as a notable option. Since prices stopped falling and stabilized at the end of last month, the market has remained stable. With the abolition of the minimum production policies, and thanks to reduced operating levels, inventory levels have decreased. In some cases, individual companies even raised their prices slightly on a tentative basis. Whether it’s a real increase in prices or an increase aimed at stabilizing them, does ammonium chloride have a promising future? Currently, the mainstream ex-factory price for wet ammonium in China is around 300–420 yuan per ton. In the North China market, the mainstream ex-factory price for dry ammonium is 500–520 yuan per ton, while in the East China market it is around 480–530 yuan per ton. Premium prices can be negotiated or subject to discounts; for detailed prices in other regions, please visit the member area of China Fertilizer Network. However, according to traders in some regions, although some ammonium chloride manufacturers are trying to control the number of orders they accept, sales at the end market are not proceeding smoothly. Moreover, purchases are being made cautiously ahead of the Spring Festival; as a result, issues related to transportation and inventory around the eve of the festival must be considered once again. On the one hand, the overall industry utilization rate of caustic soda manufacturers has decreased significantly, and the inventory levels of some of these companies have fallen. According to statistics from China Fertilizer Network, as of now the overall operational rate of the caustic soda industry has dropped to around 71%. In Tianjin and Dalian, about 60% of ammonium chloride production facilities are in operation; a few ammonium chloride plants in Jiangsu are under maintenance. In the Central China region, the operational rate of some ammonium chloride plants is low, with normal operations expected to resume in January. In Sichuan, some ammonium chloride plants are under maintenance or operate at only 30% capacity. In Shaanxi, strict environmental inspections mean that ammonium chloride plants remain at a relatively low level of operation ； Additionally, the market for soda ash is currently sluggish, with prices falling seemingly without any limit. In some areas in Central China, the reference price for light soda ash at the factory level is around 1250–1300 yuan per ton; prices are also low in other regions. For some companies, the price per two tons has dropped below the cost level. As a result, these companies either reduce their production volume voluntarily or lower their prices. However, reducing production volume is a more practical solution, as it helps to keep the price of ammonium chloride relatively stable. On the other hand, demand is somewhat tight, but there are still concerns in the long term. Of course, the progress of winter storage has increased the volume of ammonium chloride sold. Companies that produce compound fertilizers and ammonium chloride in pellet form have seen an increase in their raw material purchases, with particularly substantial stockpiles of raw materials accumulated ahead of the Spring Festival ； At the same time, ammonium chloride manufacturers had a sufficient amount of guaranteed orders received in advance, which to some extent led to a relative shortage of supplies at present and slowed down the delivery speed. When it comes to demand, the special period of the Spring Festival must be mentioned. As the Spring Festival holiday approaches, it is possible that some compound fertilizer manufacturers and enterprises that produce granulated ammonium chloride may reduce or even stop production. As a result, current purchases can be considered as ahead of schedule; the volume of ammonium chloride purchased will decrease at that time, and ammonium chloride manufacturers’ inventory levels could once again face the risk of increasing, which requires caution. The urea market is weak, with negative factors dominating in the short term; prices are falling in many areas. The adverse impact on ammonium chloride is becoming increasingly evident, and since the supply of ammonium chloride is somewhat tight, some compound fertilizer manufacturers may prefer to use urea instead. In summary, in the short term, the supply of ammonium chloride in the market is slightly tight; industry sentiment is somewhat better than before, and the overall trend is positive ； However, factors such as the resumption of operations, demand, and transportation along the supply chain need to be taken into consideration before the Spring Festival; therefore, the market is unlikely to take hasty actions before that time. If some companies raise their prices slightly in a tentative manner, it is likely to be a strategy aimed at stabilizing the situation. Overall, the market trend should remain stable. With cautious handling in the early stages, ammonium chloride holds promising prospects for the future. (Tan Junying)