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Urea prices rebound; ammonium chloride is in an advantageous position Author/Source: China Fertilizer Network Date: 2021-03-15 Clicks: 2 After a slight regional increase, urea prices have seen new bidding opportunities. Last night, India announced new bidding calls, with the submission deadline set for March 22; the bidding period lasts until March 31, and shipments are to take place by April 28. This represents further positive developments for the urea market, which could lead to a general rise in prices. In such a scenario, ammonium chloride would be in an advantageous position. Currently, the price of ammonium chloride has risen but remains stable; manufacturers have a sufficient amount of orders to handle, resulting in a tight supply-demand balance. Supplies are particularly scarce in some areas, and some companies still need to control the number of orders they accept, or even stop taking new orders for the month ； However, in some companies, sales at the higher prices after the price increase have slowed down, showing a slight decline ； For example, in the Central China region, the standard ex-plant price for wet ammonium is around 650–670 yuan per ton, while the standard ex-plant price for dry ammonium is around 710–750 yuan per ton; discounts may be available for orders at higher prices. In the Sichuan and Chongqing regions, the standard ex-warehouse price for some types of dry ammonium is around 820–830 yuan per ton. Whether these high prices can be maintained will depend on the impact of urea prices, as well as the operating status of ammonium chloride production plants and demand levels. First, taking advantage of the slight increase in urea prices and the support provided by printed quotes, prices are likely to continue rising, which is certainly beneficial for ammonium chloride. After a significant drop in urea prices earlier on, it may have reached the psychological price level expected by the industry; as a result, some buyers stepped in to purchase goods at lower prices, leading to a tentative rebound in prices ； Additionally, India has issued new tenders; market rumors suggest that the total volume could be around 1.5 million tons, though this remains uncertain. At the same time, international urea prices are high, and these factors contribute to an improvement in the domestic urea market situation. This is certainly beneficial for a stable ammonium chloride market as well. Secondly, there is little change in the operating levels of ammonium chloride manufacturers, but there may be a slight increase in the future. According to statistics from China Fertilizer Network, as of now the overall operational rate of the caustic soda-producing enterprises in this industry is around 69.9%, with a daily production volume of approximately 35,000 tons. These enterprises prioritize orders for soda ash, and prices for it remain high; as a result, production efforts are focused on soda ash, which means that the production of ammonium chloride also stays at high levels ； Furthermore, the various caustic soda-producing enterprises do not have any maintenance plans. One ammonium chloride production facility in Yunnan has plans to resume operations in the future, and some enterprises in the Central China region also have room for increased production. This indicates that, in the short term, the operation of these caustic soda-producing enterprises will remain stable, but there may be a slight upward trend in the long run. For ammonium chloride again, orders awaiting shipment across various manufacturers are sufficient; supply is somewhat tight in some areas, but there is a lack of large-scale new orders to support the market. It is the spring season for fertilizer use, and ammonium chloride manufacturers are seeing smooth sales; there are plenty of pre-orders from earlier in the period, ranging from over a thousand tons to more than 300,000 tons. These factories do not face any actual inventory pressure, and overall social inventory levels remain low ； In many areas, the speed at which orders are processed is slow due to a large backlog of orders awaiting shipment. The supply of ammonium chloride in the market is relatively tight; as a result, some companies need to limit the number of orders they take on or refrain from accepting new orders for the time being ； The production volume of compound fertilizer manufacturers is increasing steadily, but it remains at just over 50% of its potential level. Due to the unstable and significant fluctuations in the prices of various raw materials, pricing and sales progress are slow, and cash collection is not as smooth as expected. Even though the high price of urea has led to an increase in purchases of ammonium chloride, manufacturers’ enthusiasm for production is limited, so there are not many large-scale orders for ammonium chloride at present. Especially since there are already sufficient stock levels available, purchases are usually made as needed or through additional orders ； Some downstream traders have reduced their purchases of ammonium chloride, opting instead for moderate quantities or placing supplementary orders. Overall, there is a tight balance between supply and demand for ammonium chloride. Companies have sufficient orders pending fulfillment, and urea provides additional support. However, the progress of accepting new orders for ammonium chloride, especially large-scale orders, has slowed down. The positive factors currently hold the upper hand, and it is expected that the price of ammonium chloride will remain stable at high levels in the near term, with the market continuing to show a positive trend as companies proceed with fulfilling their pre-ordered shipments. (Tan Junying)