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No matter how much urea prices fluctuate, ammonium chloride seems to be stable. Author/Source: China Fertilizer Network Date: 10-19-2020 Clicks: 3 The bid prices specified in the tender documents have been released; however, the exact amount of urea that will be purchased by our country is not yet clear. Recent industry estimates suggest that the quantity of urea acquired by our country in this tender might be limited. Additionally, there are constraints on loading and unloading at ports, along with existing urea inventory, and the shipping date is set for November 16th. Therefore, the support provided by these tender documents for urea production in our country is limited. In the nitrogen fertilizer market, urea and ammonium chloride are closely related, but at present, the impact of urea prices on ammonium chloride is also limited. Regardless of urea price fluctuations, does ammonium chloride remain stable? In fact, it’s not accurate to say that the ammonium chloride market is stable; it can only be said to be relatively stable. Currently, the quotes offered by ammonium chloride manufacturers do not match the actual transaction prices. While manufacturers maintain firm quotes, actual transactions are usually negotiated on a case-by-case basis. Of course, there are occasional large orders at lower prices; however, what differs this year from previous years is the absence of any minimum price guarantee policy. It is said that such guarantees can have dual effects – without them, buyers may feel concerned when purchasing goods. The volume of sales for manufacturers is also lower compared to the same period in previous years, yet prices remain supported to some extent. Currently, the price gap between wet ammonium and dry ammonium in the domestic market is narrowing. The export price of dry ammonium at Bayuquan Port remains around 620 yuan per ton, while wet ammonium in Hunan is being delivered at around 420–450 yuan per ton. Following the postponement of the phosphate fertilizer conference, the market situation for ammonium chloride has not improved; however, the number of inquiries from some companies has increased slightly. The price trend is a matter of concern for the industry, as is the progress of supply and demand. Firstly, it is unlikely that production by caustic soda manufacturers will decline significantly; on the contrary, there is a tendency for an increase in the long term. According to statistics from China Fertilizer Network, the overall operational rate of the caustic soda industry has dropped to around 68.5%. This is due to the withdrawal of some production units from a large factory in Henan, short-term maintenance work at a large factory in Hubei, and the suspension of operations at some units of a large factory in Sichuan. However, production is set to resume gradually in the latter part of the month or at the beginning of the following month, and the industry’s operational rate is likely to rise back above 70% in the future ； Additionally, although the prices of light alkali for a few local companies have seen a modest decline, the overall situation remains favorable. Companies still have orders to fulfill, and prices remain high; as a result, they will continue to operate at high capacity in the short term to ensure smooth sales of their main product, soda ash. At the same time, the production of ammonium chloride will also remain at high levels ； Furthermore, the inventory pressure still existing in ammonium chloride manufacturers cannot be ignored. Secondly, overall demand is difficult to drive during the off-season, though there is some demand expected in certain areas. It is currently the off-season for the fertilizer market; traders are not very enthusiastic about making purchases, and they believe that the price of ammonium chloride has not yet reached their desired level, so purchases are carried out only as needed ； Fertilizer manufacturers have limited stock of ammonium chloride as a raw material, with overall utilization at only 43.21%; there are no large-scale orders for the procurement of this raw material. Nevertheless, it is possible that, following the postponement of the phosphate fertilizer conference, these manufacturers will be forced to accelerate their production schedules. There are many negative factors, but there are also positive ones. First is the demand in the Northeast market; it has been observed recently that there is an increase in some inquiries. Once the compound fertilizer manufacturers resume operations, the volume of raw materials used will increase as well ； Second, the downstream inventory of ammonium chloride is limited ； Third, if the price of soda ash in certain areas continues to fall, ammonium chloride manufacturers will maintain stable prices, and there may be a trend of buying up stocks at lower prices in those areas. Once again, the market trend of urea more or less affects ammonium chloride. This Indian tender did not drive up urea prices, and it also reduced the support for the ammonium chloride market. In summary, considering the production activities of compound fertilizer manufacturers and their willingness to purchase raw materials, fluctuations in urea have a relatively limited impact on ammonium chloride; it is the supply and demand dynamics for ammonium chloride itself that are key to determining its market trends. There are positive factors in the short term, but negative factors cannot be ignored either. It is expected that the ammonium chloride market will remain weak in the short term, with prices remaining relatively stable; however, transactions will still be negotiated on a case-by-case basis. Slight adjustments in prices, either downward or upward, in certain areas are also normal. (Tan Junying)