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The benefits of urea – can ammonium chloride hold on a bit longer? Author/Source: China Fertilizer Network Date: 2020-07-21 Clicks: 120 Hype surrounding products with printed markings is now something common in the market. At present, the domestic urea market remains strong but has seen slight declines in some areas. As top-dressing activities come to an end, manufacturers report a slowdown in sales, and prices are still likely to continue falling ； Now, we can only shift our focus to the industrial market, where prices remain relatively high ； The negative impact of this on ammonium chloride is not yet significant; it seems that the price of ammonium chloride can still hold its ground. However, with falling urea prices, ammonium chloride no longer benefits from the favorable conditions associated with urea. In addition, it is necessary to pay attention to changes in the supply and demand dynamics for ammonium chloride itself. Currently, the ammonium chloride market is operating steadily, with most companies offering relatively stable prices. The price of wet ammonium remains higher than that of dry ammonium; in some areas, supply is slightly tight, while sales of dry ammonium are weaker. In the North China region, the standard ex-plant price for dry ammonium is 580 yuan per ton, subject to negotiation. In Central China, the standard delivery price for wet ammonium is around 560–580 yuan per ton, while the standard delivery price for dry ammonium is around 620–660 yuan per ton. Overall, prices remain firm, with only slight room for negotiation in certain areas. Firstly, compared to ammonium chloride, the price of urea remains relatively high; moreover, supported by domestic pricing trends, there is still some speculation regarding urea in the domestic market. Currently, the overall operational rate of urea production plants in this industry is around 53.21%, with a daily production volume of approximately 149,000 tons. Additionally, new production capacity is set to come online in the Shandong region, and some urea plants that are currently under maintenance also have plans to resume operations. As a result, the overall operational level of this industry is showing a gradual recovery trend ； In addition, domestic prices of liquid ammonia have declined in some areas, and further declines are expected; it is possible that some companies may shift their production focus slightly toward urea, thereby increasing the sales pressure on urea manufacturers ； The use of urea in agricultural fertilization is gradually coming to an end, and there are no large-scale purchases in the market. In particular, large agrochemical suppliers are cautious, opting for moderate levels of purchase and sale as needed; they are not optimistic about the long-term trend of urea prices, so they have no interest in making long-term stockpiles ； In the industrial sector, the operation rate of compound fertilizer manufacturers has slowly recovered to 50%, sales progress is poor, and raw material purchases are carried out on a demand-based basis ； The overall operating level of plywood factories remains low, and expectations for an improvement in their operational activity are modest; as a result, there are not high hopes regarding the volume of urea purchased ； Fortunately, factors such as hype surrounding the printed markings and a temporary reduction in supply help to support prices; therefore, although urea prices are expected to decline, the extent of that decline should remain limited for now. Secondly, the operating capacity of ammonium chloride manufacturers has recovered to 70% of its previous level, and there is still room for further improvement. At present, parking for maintenance is only the case in a few instances, such as in a small number of enterprises in Sichuan, Dalian, and Hunan. Enterprises with increasing load levels include those in Hangzhou and a factory in Yunnan, while those with slightly insufficient load levels are found in a few large factories in Henan and Sichuan. The remaining caustic soda-producing enterprises are operating at high levels or at full capacity. According to statistics from China Fertilizer Network, as of now the overall operational rate of these caustic soda-producing enterprises has risen to 70.4% ； Moreover, recently, the production facilities of some ammonium chloride manufacturers in Hangzhou, Henan, and Yunnan have been restarting. By the end of the month, a large ammonium chloride manufacturer in Henan plans to increase its production capacity, which will lead to an increase in the supply of this product in the market. The market demand for ammonium chloride is once again in a low season, with no major orders to drive sales. Currently, the overall operational rate of the compound fertilizer industry is low. Although large manufacturers do not have much raw material inventory, they have ample inventory of finished products; raw material purchases are carried out as needed. Small and medium-sized compound fertilizer enterprises operate at a low level or have suspended production ； Traders are operating cautiously; purchasing enthusiasm is low during the off-season, with purchases being limited in scale, and there are no plans to build up large inventory levels in the short term ； In addition, the production capacity of enterprises that produce ammonium chloride in pellet form is also at a low level, with only small orders for the purchase of raw ammonium chloride ； Given the weak domestic demand, some hope must be placed in exports to help alleviate the surplus production of ammonium chloride in the country. Recent information from some traders indicates that export conditions for ammonium chloride are fairly good; however, the total volume of exports may have decreased compared to last month, yet this still helps to reduce pressure on the domestic market to some extent. Overall, production by ammonium chloride manufacturers has seen a clear recovery and is continuing to increase. Domestic demand remains weak; although urea prices are still at relatively high levels, the prevailing sentiment is bearish, suggesting further price declines that could have a negative impact on ammonium chloride prices. Alkali producers face considerable cost pressures, but inventory levels are not yet concerning, and they have a strong willingness to maintain their prices. It is expected that ammonium chloride prices will remain stable in the short term, with only slight fluctuations in some areas. (Tan Junying)