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Regardless of whether urea prices rise or fall, as long as there is hope for ammonium chloride prices, that’s enough. Author/Source: China Fertilizer Network Date: December 14, 2020 Clicks: 1 The frequent increases in urea prices can be seen as a fitting conclusion to the end of the year. Even though there is growing resistance within the industry to such high urea prices, prices for urea are still rising slightly in some areas. Due to environmental regulations limiting production and limited supplies of natural gas, urea production has dropped significantly, to around 130,000 tons; as a result, supply is tight. In regions like Linyi, the price at which compound fertilizer manufacturers purchase urea has risen to 1,840 yuan, and this trend may continue. The enthusiasm surrounding urea prices has not yet subsided； Since the second half of this year, things have been quite difficult for compound fertilizer manufacturers. The prices of raw materials such as nitrogen, phosphorus, and potassium have all increased, while sales of the finished compound fertilizers themselves have been slow. Although prices have risen, sales volume has remained low, resulting in limited increases in profits and thus increased cost pressures. However, with urea prices remaining high, there is an advantage to purchasing ammonium chloride for downstream use, which gives the market some hope. Yet it is not realistic to expect a significant rise in prices. Currently, the market for ammonium chloride remains stable. Manufacturing companies have a sufficient amount of orders pending fulfillment, though some still need to control the number of orders they take on or decide not to accept any orders for now. These pending orders can generally be fulfilled by mid-to-end of the month, with some possibly being completed around the Spring Festival ； Quotations across various regions are showing a steady upward trend. Currently, the mainstream ex-plant price for dry ammonium in the Central China region is around 550–560 yuan per ton, with supply in the market being relatively tight. The export price for dry ammonium from Bayuquan Port in the Northeast is around 650–660 yuan per ton, and the delivery process is progressing satisfactorily. However, the trend of ammonium chloride has been steady recently, with a calm market situation. Apart from the positive factors related to urea, what other factors could influence its advantages going forward? Firstly, the overall operational rate of the caustic soda industry remains around 70%; it’s not high, but it’s also not low. At present, the load on the ammonium chloride production units in a factory in Tianjin is slightly low. Strict environmental regulations have led to reduced production in Henan and Shaanxi provinces, resulting in slight fluctuations in the operation of ammonium chloride manufacturers; some small plants have stopped production. In the East China region, ammonium chloride manufacturers are operating at near full capacity. In the Southwest region, there are restrictions on natural gas supply, and rising gas prices may lead to a decline in the operation of some ammonium chloride plants that rely on gas as a raw material in the future ； Furthermore, the current market for soda ash is sluggish, with high inventory levels in the industry and prices continuing to fall; the overall trend remains bearish. To reduce production costs, soda ash manufacturers are likely to maintain a high level of operation ； However, due to the impact of domestic environmental inspections and production restrictions, it is possible that some ammonium chloride manufacturers may temporarily suspend or reduce their production as a result. Secondly, there are sufficient pending orders for ammonium chloride, but new orders are growing slowly. Currently, compound fertilizer manufacturers have sufficient stock of ammonium chloride, and they are cautious about placing new orders; as a result, the overall pace of fertilizer preparation has slowed down. However, due to the high prices of urea, some of these manufacturers still prefer to use ammonium chloride as the raw material for nitrogen-based fertilizers ； Traders stock ammonium chloride as needed, and no large-scale purchases are planned for now ； The production situation of enterprises that produce compressed ammonium chloride is satisfactory, and the procurement of ammonium chloride is progressing smoothly ； Additionally, the newly launched high-tower compound fertilizer projects in the Northeast region are generating increasing demand for various raw materials over time. The progress of winter storage of fertilizers in this market is also attracting attention from many manufacturers. Based on rough estimates, the total volume of fertilizers arriving in the Northeast market is slightly above half, while the amount of fertilizers coming from outside the region is currently limited. Therefore, as demand rises in the future, there is optimism regarding the performance of the ammonium chloride market as well. Overall, at present, most ammonium chloride manufacturers rely on pending orders for support, and their inventory levels are low. Moreover, in the long term, if some companies reduce their production capacity, the positive effects this will have on the industry will be evident ； However, due to sufficient inventory levels downstream and traders being cautious in their operations, demand remains moderate. It is expected that the price of ammonium chloride will remain stable with a slight upward trend in some areas in the near future, but the overall price level should stay steady, with manufacturers issuing advance payment orders. (Tan Junying)