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Increasing supply, decreasing demand – will the price of ammonium nitrate not improve? Author/Source: China Fertilizer Network Date: 2020-04-13 Clicks: 7 Since April, the price of monoammonium phosphate has started to drop significantly. Although most companies in Hubei do not provide prices and deals are negotiated on a case-by-case basis, it is reported that the actual ex-factory price of 55% powdered monoammonium phosphate in Hubei is as low as 1800–1860 yuan per ton (the same unit applies hereafter); some larger manufacturers charge slightly more. Large manufacturers in Sichuan have reduced their ex-factory prices for 55% powdered monoammonium phosphate to 1800 yuan, with further reductions still possible; the price is expected to drop to 1700 yuan. Although most companies in Henan do not provide prices for 55% powdered monoammonium phosphate, some of them offer an ex-factory price of 1800 yuan or even less. Anhui’s large manufacturers have also reduced their prices by 50 yuan recently; currently, the ex-plant price for 55% ammonium phosphate is 1900 yuan, with the actual transaction price subject to negotiation. So why does this happen? Most compound fertilizer manufacturers have entered the production phase of high-nitrogen corn fertilizers and rice fertilizers. Quotations are available at present, but the policies remain unclear; as a result, downstream distributors are not very eager to make payments. Given the unfavorable conditions both domestically and internationally, distributors tend to wait and see rather than rushing to stock up in large quantities in advance. At present, the overall operating rate of compound fertilizer manufacturers is around 60-70%, which is considered a high level. Some of the ammonium nitrate raw materials stored in February and March are still arriving at the factories. Although there is demand in April, the demand for ammonium nitrate for summer fertilizers, which are mainly high-nitrogen fertilizers, is relatively low. Additionally, as the price of ammonium nitrate has been declining recently, compound fertilizer manufacturers do not have much interest in making new purchases at the moment. Demand is expected to improve slightly in the middle to late period, but the increase should not be significant. At present, the overall operating rate for monoammonium nitrate is around 50%. In the Hubei region, this rate has risen from less than 30% during the pandemic to around 50%. There is an increase in supply from enterprises; it is understood that most of the pending orders for monoammonium nitrate can be fulfilled by mid-month or by the end of April, indicating that there is not much left to ship. Shipments have been smoother recently compared to before, and companies currently face little pressure in terms of inventory. However, new order signings are not satisfactory, with some small manufacturers stating that their inventory of 55% ammonium nitrate powder is expected to exceed 10,000 tons by mid-May. It is evident that the sales pressure on companies is increasing gradually. In recent years, the export of monoammonium phosphate has not been very satisfactory, and it has had little impact on the domestic market for this product. The international market for monoammonium phosphate is also in a poor state. In Brazil, the main country that imports this product, import activities remain slow due to currency uncertainties and high inventory levels, which has led to further price drops. Currently, the CIF price for 63% granular monoammonium phosphate in Brazil has fallen to $310–315 per unit. The import season in Australia has also slowed down. Currently, the intended FOB price for 55% granular monoammonium phosphate is $250, which translates to a port arrival price of less than 1,700 yuan; the intended FOB price for 60% granular monoammonium phosphate is also only $280, resulting in a port arrival price of less than 1,900 yuan. It can be seen that the intended export price is inversely related to the domestic market price. The sulfur market has shown modest performance; recently, port sulfur prices have remained stable despite being under pressure. The price of granular sulfur at ports along the Yangtze River remains steady at 620 yuan. The prices of sulfur at the Puguang plant and the Wanzhou and Dazhou facilities have dropped but are now stable at 670 yuan and 630 yuan respectively. Currently, the weekly inventory of sulfur in ports has increased by about 116,000 tons, bringing the total port inventory to around 2.92 million tons. Of this amount, the inventory at Yangtze River ports has increased by 20,000 tons, resulting in a total of 1.85 million tons. It is evident that inventory levels in Hong Kong remain high. Although prices on the international market have risen, there has been a decline in prices for the US dollar-denominated contracts, and market activity is weak. It is expected that both buyers and sellers of sulfur will continue to be at an impasse in the short term, with little possibility of significant price increases. In summary, a decline in the price of ammonium sulfate is quite normal. Currently, demand for ammonium sulfate is at a low level; as the amount of product awaiting shipment decreases, supply increases. Moreover, raw materials such as sulfur provide little support in terms of cost for ammonium sulfate. It is expected that prices of ammonium sulfate will continue to fall. (Zhao Hongye)