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Urea prices are rising; ammonium chloride prices remain stable. Author/Source: China Fertilizer Network. Date: 2021-03-22. Clicks: 4. Urea prices have seen a modest increase, driven by expectations of export orders as well as domestic demand. However, due to high levels of production activity by manufacturers, and overall moderate demand from both industrial and agricultural sectors, the increase in prices remains limited. Some manufacturers are concerned about the future trend of urea prices; in fact, some traders say that a decline in urea prices is not far off. There is a strong sense of caution in the urea market, with expectations placed on the official pricing decisions. However, since those decisions have not yet been made, uncertainties remain. If urea prices remain strong and rise, the support for ammonium chloride will continue; otherwise, another negative factor will arise for ammonium chloride. At present, the domestic ammonium chloride market is operating in a stable manner overall, with slight strength in certain areas. Manufacturers have orders to fulfill and thus possess considerable confidence; as a result, some of them still have the flexibility to select which orders to take on. However, as demand gradually declines, especially in the Northeastern market, some traders are selling their inventory at low prices, though this has not yet affected the mainstream prices in other regions. Currently, the export price of dry ammonium in Bayuquan is around 800 yuan per ton, while prices remain stable in other markets. In the Central China region, the typical factory outlet price for dry ammonium is between 750 and 780 yuan per ton. In Yunnan, Guizhou, Guangdong, and Guangxi, the arrival price of dry ammonium is around 870 to 900 yuan per ton. At this time, the ammonium chloride market is waiting – waiting for further increases in urea prices, and for support from reduced operations by caustic soda manufacturers. Firstly, the operating capacity of caustic soda manufacturers remains high; there are no maintenance activities in the short term, and there is a slight upward trend. According to statistics from China Fertilizer Network, the overall operational rate of ammonium chloride manufacturers in the country has risen to around 70.9%. Although soda ash manufacturers have inventory of this product, they are still waiting for new orders. Moreover, due to the coordinated adjustments made by these companies, there is a need to control the number of orders received for soda ash, which means there is still room for price increases. As a result, these companies are focusing their production efforts on soda ash. A few companies that are undergoing maintenance or reducing production plan to resume operations or increase output by the end of this month or early next month. Secondly, ammonium chloride manufacturers have a certain amount of stock ready for shipment, but the volume of new orders has declined, which may lead to inventory buildup in the future. It must be said that companies dealing with ammonium chloride have a sufficient amount of orders that are ready to be shipped; the total volume of such orders currently ranges from 500,000 to 600,000 tons. Orders can be fulfilled by the end of the month in some cases, or as early as the first week of the following month in others. Therefore, some companies still have the flexibility to choose which orders to accept ； However, as demand in the Northeast market began to decline, the sales of ammonium chloride slowed down. Some traders sold their inventory at low prices or reduced the prices, which had a negative impact on other markets. At the same time, the sales of goods from regions outside this area, such as Central or East China, were hindered, forcing them to shift their sales focus to the southern markets. In the long run, this will likely result in an oversupply of goods in the market ； Currently, compound fertilizer manufacturers are facing difficult circumstances: costs have risen significantly, yet they are unable to raise prices on their own products. There is little enthusiasm for purchasing raw materials, and the overall industry utilization rate is only 53.55%. Even though the inventory of ammonium chloride is limited and its price is advantageous compared to urea, the utilization rate of compound fertilizers remains low. Manufacturers purchase raw materials as needed, without any inclination to place large orders ； The same is true for raw material procurement in enterprises that produce extruded ammonium chloride particles ； Traders are the first to respond to market changes; sensing a shift in demand, they become more cautious in their purchasing, and generally adjust their procurement schedules and selling prices flexibly. Apart from the slight increase in the price of urea providing some support, another factor affecting ammonium chloride prices is the maintenance work that these companies will carry out later on. A few large manufacturers have indicated that they plan to conduct maintenance for 20-30 days in May; as a result, the supply of ammonium chloride during April and May will be limited to some extent. It’s also possible that certain companies may reduce their production volume. Overall, currently ammonium chloride manufacturers lack orders to support their operations and generally have no inventory. While urea provides some support, demand is weakening, resulting in few large-scale transactions in the market. Prices in the Northeast region have eased, with positive factors currently holding sway, but negative factors cannot be ignored either ； It is expected that the price of ammonium chloride will remain stable in the near term, with slightly stronger prices in some areas; in the long run, ammonium chloride can benefit from the support provided by periodic maintenance periods. (Tan Junying)