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Ammonium chloride: Tight supply and rising prices – Author/Source: China Fertilizer Network, Date: 2020-03-16, Clicks: 3 While everyone is paying attention to the rising prices of urea, ammonium chloride, a lesser-known nitrogen fertilizer, has also seen its prices rise several times since the end of February； Currently, the ammonium chloride market in China is facing a shortage of supply; companies have a large number of orders pending fulfillment. As a result, they generally need to limit new orders or even stop accepting them. The inventory accumulated during the Spring Festival is also gradually decreasing, and with improved transportation conditions, ammonium chloride manufacturers are able to sell their products more smoothly ； Meanwhile, driven by the strong demand in the spring market, companies are facing tight order fulfillment schedules. As a result, they primarily focus on the local market and proceed cautiously with outbound orders. Prices have also seen a certain degree of increase compared to the previous period ； Recently, due to a shortage of ammonium chloride supplies, some companies still intend to raise prices. Currently, the standard ex-plant price for dry ammonium in North China is around 550–600 yuan per ton. For dry ammonium supplied from outside the provinces in Central China and delivered via waterways to the ports, the reference price is about 600 yuan per ton. In Jiangsu Province, the standard ex-plant price for wet ammonium is around 430–450 yuan per ton, while high-quality grades cost around 500 yuan per ton. For detailed prices in other regions, please visit the member area of China Fertilizer Network. Compared to urea, ammonium chloride still has room for price increases, but it is also necessary to take into account various influencing factors. Firstly, although the operating rate of caustic soda manufacturers is high, there is an ample supply available for dispatch. Affected by the pandemic, the operation of ammonium chloride production facilities in certain areas has been adjusted. For example, a large ammonium chloride plant in Hubei resumed operations after shutting down, while another large plant in Jiangsu canceled its planned maintenance work for March. In addition, a large ammonium chloride plant in the Northeast has been shut down since early February. The production capacity of some ammonium chloride plants in Tianjin and Sichuan is slightly lower, while the rest of these plants are operating at high levels or even beyond their capacity limits. According to statistics from China Fertilizer Network, as of now the overall operational rate of the caustic soda industry is around 78.8%, with a daily production volume of approximately 39,280 tons – a significant increase compared to the period before the Spring Festival. This will be one of the factors that need to be taken into consideration when predicting the future trend of ammonium chloride production. Although production levels in enterprises remain high, demand for ammonium chloride has been increasing steadily since the end of February. To date, factories have sufficient orders to fulfill, including those placed at low prices before the Spring Festival. The amount of order backlog in these enterprises ranges from 30,000 to 50,000 tons, to several hundred thousand tons, which to some extent offsets their high production levels. Secondly, demand picked up suddenly, and the market for ammonium chloride made a rapid comeback. First, due to the impact of the pandemic, transportation was disrupted in various regions earlier on; as a result, some downstream markets inevitably saw panic-driven purchasing behavior ； Secondly, there is a surge in demand during spring, especially as demand increases sharply in the Northeast region. Companies mainly focus on their local markets, which leads to stock shortages in some areas ； Third, before the Spring Festival, the reserves of ammonium chloride, the raw material used by enterprises producing compound fertilizers and extruded granulated ammonium chloride, are limited ； Fourth, large traders have been stocking up according to their needs in the earlier stages, and current bulk purchasing activities are providing support. Once again, there is lateral support from both soda ash and urea. First, the soda ash market is weak, with prices remaining low and even showing signs of further decline in some areas. The outlook for its future performance is largely pessimistic. Given cost considerations, integrated soda ash producers are shifting their focus to ammonium chloride, which indirectly provides support to the ammonium chloride market ； Looking at the recent market trend for urea, it shows a slightly weak performance, with minor price drops in certain areas; overall, however, its price remains high. Compared to ammonium chloride, urea still has a higher price. For example, the purchase price of urea by compound fertilizer manufacturers in the Linyi area is around 1820–1830 yuan per ton, while the reference price for some ammonium chloride supplies from outside the province delivered to certain areas in Shandong is 600–650 yuan per ton, or slightly higher. Compared to urea, ammonium chloride still has a price advantage. Moreover, given the unfavorable economic conditions, some compound fertilizer manufacturers may prefer to use ammonium chloride, which requires lower costs, as a substitute for urea. Lastly, one must be wary of a potential negative factor in the ammonium chloride market: production activity. Currently, supplies of ammonium chloride are scarce; manufacturers are highly motivated to produce it, have no maintenance plans scheduled, and are working overtime. This could potentially become a “stumbling block” for the future market trends of ammonium chloride. In summary, in the ammonium chloride market, amid strong demand and tight supply, prices are likely to continue rising as market conditions improve. However, based on past experience, manufacturers are expected to proceed cautiously, with prices possibly increasing in a gradual manner. (Tan Junying)