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Urea and clams in conflict: Ammonium chloride reaps the benefits / Author/Source: China Fertilizer Network / Date: 2021-01-11 / Clicks: 7 It’s hard not to exclaim: Urine prices have risen again. Indeed, the environmental warning in certain areas has been lifted. Additionally, due to the impact of the situation in Shijiazhuang, Hebei, companies downstream may have decided to stock up on urea in advance to address transportation issues; as a result, urea prices in those two regions and in Shandong have seen a slight increase. In other areas as well, a few companies have raised their prices, which can be seen as a situation where various parties are competing with one another ； In the short term, urea manufacturers will continue to operate at limited capacity due to environmental regulations and restrictions on natural gas supply; as a result, supply in certain areas will be tight, which helps keep prices high. For ammonium chloride as well, this can be considered a win-win situation, providing some positive support. Currently, the price of ammonium chloride in the domestic market remains relatively stable; production levels have temporarily decreased, supply is tight in some areas, and prices are steady with only slight upward adjustments in certain regions ； Even though the enthusiasm for placing new orders from downstream clients has slowed down, ammonium chloride manufacturers still have a sufficient amount of orders waiting to be fulfilled; as a result, they continue to control the pace at which they accept orders or refrain from signing new ones for the time being. It is understood that the export price of dry ammonium at Bayuquan Port is around 660–670 yuan per ton, while the standard factory price for dry ammonium in the southwest region is about 550–620 yuan per ton. The price upon arrival in Yunnan and Guizhou is around 700–720 yuan per ton; of course, these prices can be negotiated to some extent. As for the future trend of ammonium chloride, it will need to be assessed based on the following factors. Firstly, if urea prices remain high, it will continue to provide significant support for ammonium chloride. The trend of urea also depends on supply and demand. As for demand, there’s little to say – it’s the off-season for agriculture, so the grassroots market tends to adopt a wait-and-see attitude; purchasing by industries is relatively active. In particular, the resurgence of outbreaks in certain areas has led fertilizer manufacturers to increase their stockpiles of urea in advance ； However, the main factor contributing to the high prices of urea is low production levels; there is still a shortage of natural gas in the southwestern region, and environmental regulations remain strict. Even as urea production facilities in Shanxi Province begin to resume operations, overall production levels remain low. The price of liquid ammonia remains high, and companies that switch to producing liquid ammonia can expect favorable profits. With a seller’s market for urea, prices are likely to remain high. Secondly, ammonium chloride manufacturers themselves have low production levels, and there is no inventory pressure. In the southwest region, only 50-60% of ammonium chloride production facilities are in operation. In the east China region, a few ammonium chloride plants are undergoing minor maintenance, resulting in slightly lower levels of operation. In the north China region, one plant’s ammonium chloride production facility is operating at 70% capacity. Of course, in the southwest region there are also some companies that focus their production on liquid ammonia. A plant in Shaanxi remains shut down due to environmental regulations, with no set date for resuming operations. According to statistics from China Fertilizer Network, as of now, the overall operational rate of caustic soda producers is around 63.2%, with a daily production volume of approximately 33,100 tons ； Most factories have a sufficient amount of orders received in the early stages, so they are not under any inventory pressure; moreover, some still need to control the number of orders taken on, or plan to accept new orders in the second half of the month. Once again, although ammonium chloride manufacturers have a sufficient amount of orders pending, the progress of processing new orders has remained slow. In the early stage, ammonium chloride manufacturers generally had sufficient orders, and some of them are currently awaiting shipment; in other words, the inventory levels in the downstream market are also quite high ； Additionally, as the Spring Festival holiday approaches, some small and medium-sized compound fertilizer manufacturers or enterprises that produce granulated ammonium chloride may reduce their operations or even cease production, which will lead to a decrease in the amount of ammonium chloride needed as raw material ； However, due to the resurgence of outbreaks in certain regions such as Hebei and Dalian, as well as transportation constraints, it is possible that some downstream manufacturers will stock up on ammonium chloride in advance to address the challenges related to transportation; although this may mean taking advantage of favorable market conditions in the short term, most still remain cautious. Overall, in the short term, ammonium chloride manufacturers will operate at reduced capacity with sufficient stock available, and thanks to the support provided by urea, market conditions and prices are expected to remain favorable. However, as the Spring Festival approaches, there is a tendency for downstream industries to reduce their operations, leading to more cautious purchasing behavior; therefore, the trend for ammonium chloride is likely to be one of stability. (Tan Junying)