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The bidding for urea will be held tomorrow; there is also great anticipation regarding ammonium chloride. Author/Source: China Fertilizer Network. Date: October 9, 2020. Click-through rate: 3. On October 1, India’s RCF issued a tender for urea procurement; the bidding process will take place tomorrow, with shipment deadlines set for November 6. After a period of inactivity during the National Day holiday, the industry holds high hopes for this Indian tender. Naturally, there is also hope that it will bring about a turning point in the urea market. In addition to this Indian tender, there is also anticipation surrounding the Phosphorus and Compound Fertilizer Conference scheduled for October. Currently, the domestic urea market remains largely stable. Sales at various manufacturers are average; in some areas, there are slight fluctuations due to slower sales volume. Should the urea market improve following the Indian tender, the sluggish ammonium chloride market could also benefit from this trend and gain some momentum, or at least see its prices stabilize. Currently, the mainstream market for ammonium chloride is operating stably; however, constrained by prevailing realities, weak demand has made it difficult to maintain prices. Consequently, there are still slight downward adjustments in local transactions. However, somewhat differently from the same period last year, so far no companies have introduced any minimum-guarantee policies. Moreover, companies are determined to avoid such guarantees as much as possible, striving to keep prices stable or simply opting for buyouts instead ； Even with the help of urea, the trend of ammonium chloride actually depends on its own supply and demand dynamics. Firstly, caustic soda manufacturers maintain high operating levels. According to statistics from China Fertilizer Network, as of now the overall operational rate of soda ash manufacturers in the industry is above 70%. Since the soda ash market remains in a favorable state with prices staying high, and considering the production costs and profits associated with producing two tons of soda ash per unit, this product is of great importance to these manufacturers. The industry continues to work hard to push up its prices, while maintaining full production capacity ； Additionally, a small number of ammonium chloride producers that underwent maintenance earlier have now resumed production or are increasing their operating rates. This means that in the short term, the utilization rate of combined alkali producers will remain high and show an upward trend. However, although some ammonium chloride manufacturers have resumed production, the raw material synthesis equipment at a few of these plants has responded to the calls for capacity reduction, resulting in a temporary decrease in production capacity in those areas. Secondly, overall demand in the ammonium chloride market remains weak; however, there is potential for a local winter stockpiling market. Currently, it is the off-season for fertilizer use in the domestic market, yet companies continue to operate at full capacity, which inevitably leads to a certain accumulation of inventory. Currently, it is the off-season for agricultural demand, which keeps the operating levels of ammonium chloride pellet manufacturers low ； The same applies to compound fertilizer manufacturers. In particular, since the winter stockpiling policy remains unclear, some companies are still awaiting the convening of the phosphate and compound fertilizer conference. As a result, their enthusiasm for resuming production is low. It is understood that currently, the overall operating rate of domestic compound fertilizer enterprises remains at just slightly above 50%, which is relatively low. Notably, many small and medium-sized compound fertilizer firms have either halted production or are operating at reduced capacity, resulting in limited demand for the raw material ammonium chloride ； Furthermore, traders are very cautious about purchasing ammonium chloride, opting to buy only small quantities as needed. However, winter fertilizer storage in the Northeast region still holds great promise. Once the relevant policies on winter storage become clear, the progress of downstream fertilizer stockpiling will also be put on the agenda. Another positive factor regarding ammonium chloride is that although there are substantial levels of inventory in the market, companies still have orders to fulfill, and the inventory of ammonium chloride as a raw material for downstream industries is also limited. In addition to contributing to the improvement in the urea market itself, the Indian tender for urea has also raised expectations regarding ammonium chloride. Currently, the urea market is operating steadily, with factory prices remaining above 1,600 yuan per ton; companies are able to ship their products at a satisfactory rate. Especially with the tender upcoming, and considering the amount of urea that India will need to import in the future, China has significant advantages and opportunities for exporting urea. This Indian tender has a positive impact on China’s domestic urea market, helping to alleviate the pressure of oversupply in the market. Whether it’s due to price speculation or actual support, both shipping volumes and prices represent positive factors. In summary, although the domestic fertilizer market is in its off-season, the urea market may see a slight price increase, supported by import orders. However, this increase will be limited in both magnitude and duration. Nevertheless, this does provide some degree of support for ammonium chloride. That said, ammonium chloride producers are still struggling with excessive supply and weak demand, leading to poor performance. It is expected that the ammonium chloride market will remain stable in the short term; while minor price fluctuations may occur locally, these are normal occurrences during the off-season. (Tan Junying)