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In 2021, notable progress was made in the adjustment of China’s synthetic ammonia industry structure. Author/Source: Gasification Industry; Date: April 13, 2021; Views: 15. Synthetic ammonia is directly synthesized from nitrogen and hydrogen under high temperature, high pressure, and the action of a catalyst. It is also known as liquid anhydrous ammonia, with the molecular formula NH3. Synthetic ammonia is mainly used in the production of nitric acid, urea, and other chemical fertilizers. It can also be used as a raw material for pharmaceuticals and pesticides. At the same time, the ammonia synthesis industry is also a major energy consumer; approximately 10% of the world’s energy is used for ammonia production. Among them, coal-based ammonia synthesis capacity accounts for over 80% of the total ammonia synthesis capacity; this sector is a key sub-industry within the coal chemical industry. With the adjustment of the industrial structure, the situation of the ammonia synthesis industry has significantly improved, with both demand and prices on the rise. The production capacity of synthetic ammonia continues to decline. Since the 1950s, China’s synthetic ammonia industry has seen continuous development and growth; it is now the world’s largest producer of synthetic ammonia, accounting for approximately one-third of the global total output. At the same time, the ammonia synthesis industry is also a major energy consumer; approximately 10% of the world’s energy is used for ammonia production. Since 2010, the overcapacity rate of China’s ammonia synthesis industry has exceeded 30%. With increasing resource constraints and growing pressure to save energy and protect the environment, the industry has reached a critical stage for transformation and upgrading. To accelerate industrial structure adjustment, strengthen environmental protection, curb blind investment and low-level redundant construction, and promote the healthy development of the ammonia synthesis industry, the Ministry of Industry and Information Technology issued the “Access Conditions for the Ammonia Synthesis Industry” in December 2012. Guided by the sustainable development principles of “overall balance, optimization of existing capacity, conservation of energy and resources, environmental protection, and rational distribution”, this document sets out specific access requirements for the ammonia synthesis industry, covering aspects such as guiding the layout of new production capacity, establishing thresholds for plant scale and technological equipment levels, limiting energy consumption per unit of product, and mandating strict implementation of environmental assessment mechanisms. The “Development Plan for the Petrochemical and Chemical Industries (2016–2020)” stipulates that, in principle, no new ammonia synthesis plants using anthracite lumps and natural gas as raw materials shall be built. Moving forward, capacity reduction will be the main theme in the ammonia synthesis industry. The downstream fertilizer industry suffers from severe overcapacity, with the market remaining sluggish; demand in downstream markets for ammonia shows a downward trend. In 2016, China’s ammonia production capacity was 83.8 million tons per year, an increase of only 0.5 million tons compared to 2015. According to the latest statistics from the China Nitrogen Industry Association, by the end of 2019, the total ammonia production capacity nationwide reached 66.19 million tons, a year-on-year decrease of 2.1%. Meanwhile, the total urea production capacity stood at 66.68 million tons, down 4.1% from the previous year. The situation of overcapacity has thus seen a significant improvement. The adjustment of the industrial structure has been completed, and production has begun to recover. Currently, the top ten countries in terms of ammonia production are Russia, China, the United States, India, etc.; together they account for over half of the world’s total output. With the continuous development of China’s nitrogen fertilizer industry, the number of nitrogen fertilizer production bases has been increasing. As a result, overcapacity has become increasingly pronounced, which directly leads to complacency among enterprises and a decline in their motivation to produce. Between 2013 and 2016, the output of China’s ammonia industry showed little fluctuation, remaining at around 50 million tons. In 2017, the production of synthetic ammonia amounted to 49.4626 million tons, a decrease of 13.35%. In 2018, China’s total ammonia production reached 56.12 million tons, a year-on-year increase of 13.46%. In 2019, China’s ammonia production reached 57.579 million tons, a year-on-year increase of 5.2%. Demand is high, while supply falls short of demand. Ammonia itself is the most important nitrogen fertilizer; most other nitrogen fertilizers are produced by first synthesizing ammonia and then processing it into urea or various ammonium salt fertilizers. This segment accounts for 70% of total usage and is referred to as “fertilizer ammonia”. Meanwhile, ammonia also serves as a crucial raw material in both inorganic and organic chemical industries; it is used in the production of ammonium compounds, amines, dyes, **, synthetic fibers, and synthetic resins. This segment makes up approximately 30% of total usage and is known as “industrial ammonia”. In China, synthetic ammonia is primarily used in agriculture. In terms of downstream demand, urea accounts for the largest share at approximately 68%; other fertilizers account for 18%, and the chemical industry makes up 14%. The regions with the highest consumption of synthetic ammonia in China are mainly East China, Central South China, Southwest China, and North China. From the demand side, from 2015 to 2017, the apparent consumption of synthetic ammonia was 58.17 million tons, 53.70 million tons, and 49.22 million tons respectively. The year-on-year growth rates of apparent consumption were 2.4%, -7.7%, and -8.4% respectively. In 2018, the cumulative production-to-sales ratio in China’s ammonia industry reached 100.3%. Based on this figure, the apparent consumption of ammonia in 2018 is estimated to be approximately 56.28 million tons. In 2019, the apparent consumption of urea reached 49.988 million tons, a year-on-year increase of 0.4%. In the same year, China imported 1.0546 million tons of ammonia and exported only 0.0018 million tons. Based on the formula: apparent consumption = production + imports – exports, the apparent consumption of ammonia in 2019 was calculated to be 58.6318 million tons, representing a year-on-year growth of 4.18%. Image: The industrial structure has been adjusted; both volume and price have risen. From 2013 to 2020, the price of ammonia fluctuated, but overall the fluctuations were minor. In 2017, it reached a temporary low of 2,350 yuan per ton, while in 2018 it hit a temporary high of 3,550 yuan per ton. In the first half of 2019, the ammonia market as a whole experienced a pattern of rises and falls. At the beginning of 2019, prices in all regions showed a steady downward trend. This was due to gas producers having stockpiled gas in advance during 2018, resulting in a relatively abundant supply of gas. Additionally, some enterprises that had suspended operations in December gradually resumed production in January. With an ample supply of ammonia, the market remained weak around the Spring Festival. After the Spring Festival, there was no significant improvement in the ammonia market. Although there were some improvements in certain regions, abnormal weather conditions such as rain and snow, lower production levels at phosphate-ammonium fertilizer plants compared to the same period last year due to agricultural demand factors, and fog/mist warnings that led to production cuts all contributed to the lack of any prospect for a price rise in the ammonia market; prices remained at low levels. However, the increase in agricultural demand during March and April kept the ammonia market at high levels. In March, some companies adjusted their production structures; driven by the improving urea market, prices stopped falling and began to rise sharply. Nevertheless, the impact of the Xiangshui incident in mid-to-late March dealt a severe blow to this upward trend in the market, with the effects being particularly pronounced in the Jiangsu market. However, this favorable situation didn’t last long. In May and June, the fertilizer market entered a lull period, resulting in an abundant supply of ammonia within the region. Additionally, some downstream chemical enterprises opted to conduct maintenance during this time. With ample supply and weak demand in the liquid ammonia market, market pressures continued to persist. Unlike the dismal end to 2019, the Chinese synthetic ammonia market experienced a “tail-up” trend at the end of 2020. Prices in regions such as Sichuan and Chongqing rose to a high level of 3,800–4,100 yuan per ton, thereby driving up prices across the overall market. According to statistics from Zhuochuang Information, in 2020, the average market price of ammonia in China’s main production areas was 2,850 yuan per ton, a year-on-year decrease of 7.32%. Throughout the first half of 2020, as natural gas supply recovered and amid the impact of public health incidents, both supply and demand in the liquid ammonia market remained weak, leading to fluctuating declines in prices. In the later stage of spring plowing, agricultural demand increases, and prices gradually rebound. Furthermore, due to repeated shutdowns of urea production facilities at several major plants in the first half of the year, local supply levels surged significantly. Meanwhile, with the end of the spring plowing season and insufficient follow-up demand from the chemical industry, prices declined once again. In the second half of the year, both supply and demand sides saw increased activity. Influenced by factors such as air pollution control measures, the phase-out of fixed-bed reactors in Henan, and gas supply restrictions, the market supply became tighter. Meanwhile, downstream demand for phosphate-based fertilizers remained robust. The chemical industry entered its traditional peak season, while demand for desulfurization and denitrification in power plants remained stable during winter. All these factors contributed to a rise in local prices to relatively high levels. In summary, after several years of industrial restructuring, outdated production capacities in the ammonia synthesis industry have been continuously phased out. Both demand and prices have been on the rise. Overall, the structural adjustment efforts have yielded notable results, with both output and prices in the industry increasing.