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Urea prices fluctuate on a whim; ammonium chloride maintains its price steadily. Author/Source: China Fertilizer Network Date: 2020-07-07 Clicks: 6 The fertilizer market sees the most frequent price changes, and urea is the one whose prices seem to fluctuate based on random decisions； Entering July, talks of rising urea prices gradually faded away, with slight declines occurring in some areas. Although there were occasional price increases in the market, bearish sentiment grew stronger, with many believing that urea prices would see an overall decline ； Currently, the domestic urea market is in a weak state; manufacturers are offering slightly lower prices or hiding price cuts, and the distribution market has also seen a decline. Large agrochemical suppliers and local distributors have adopted a wait-and-see attitude and are operating cautiously. As we enter the final stage of partial top-dressing, only sporadic sales are taking place. The expected decline in urea prices is a factor that needs to be taken into consideration for ammonium chloride to some extent. Currently, the ammonium chloride market is operating steadily; companies have a certain amount of stock ready for shipment, and production capacity is on the rise. However, new orders are not as satisfactory as expected. The process of maintaining stable prices is proceeding quietly, and future trends are under close attention. First, let’s take a look at how urea will set the tone for the second half of the year. The operating rate of urea production plants remains at a relatively low level. According to statistics from China Fertilizer Network, as of Friday the overall industry operating rate for urea plants was 51.48%, with a daily production volume of only 144,400 tons; this rate continues to decline ； But as it is the off-season in the agricultural market, occasional last-minute orders cannot reverse the overall downward trend ； Additionally, industrial compound fertilizer manufacturers have seen an increase in operations, but urea is used as it is produced; plywood factories have low levels of activity due to low demand for raw materials ； Expectations for export markets are not high, and some domestic regions risk cutting prices to secure export orders. From both the supply and demand perspectives, a weakening trend in the urea market is inevitable, which will also have a negative impact on ammonium chloride. Secondly, the ammonium chloride plants that were under maintenance have gradually resumed operations, showing an overall upward trend in production activity. At present, a small number of large ammonium chloride manufacturers in Tianjin, Henan, Hubei, and Sichuan are not operating at full capacity; ammonium chloride plants in Hangzhou and Yunnan are under maintenance but are set to resume production within the first half of this month. According to statistics from China Fertilizer Network, the overall operational rate of ammonium chloride manufacturers as of now is 64.9%. However, those plants operating at reduced capacity are preparing to increase their output – one ammonium chloride plant in Jiangsu will be able to start shipping products again next week. The overall operational rate of the industry is on the rise and may reach 70%. As a result, companies will see an increase in their inventory levels of both soda ash and ammonium chloride in the coming period. The demand for ammonium chloride once again remains moderate. Supported by the maintenance work carried out earlier, ammonium chloride manufacturers currently have a certain amount of pending orders to fulfill. However, new orders are few in number and not concentrated; in particular, the market in the Northeast is cautious. In many regions such as Hubei, Henan, and Sichuan, the available supply can only be sent to other markets or those along the rivers ； Traders are cautious and sticking to a purchase approach of buying as needed ； Although the raw material inventory at downstream factories is limited, given that production levels in compound fertilizer manufacturers and ammonium chloride granulation plants are low during the off-season, the demand for raw material ammonium chloride is also limited. In the end, although there are clear negative factors in the ammonium chloride market, there are also positive factors providing support. First, the inventory pressure on ammonium chloride manufacturers is not high at the moment. Second, the market for soda ash is weak, and due to cost considerations, these companies have no intention of reducing the price of ammonium chloride for now. Third, although the export situation is average, it can still help to alleviate the excess production to some extent. In summary, the urea market is bearish, with further price declines still possible; this is unfavorable for ammonium chloride. Additionally, the increasing supply of ammonium chloride and weak demand represent significant factors contributing to its weakening trend. However, considering costs and manufacturers’ attitudes, it is expected that the price of ammonium chloride will remain stable, and minor adjustments by individual companies are normal and not a serious issue. (Tan Junying)