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Gradual increase in ammonium levels – a steady flow over time? Author/Source: China Fertilizer Network Date: 2021-07-08 Clicks: 10 The recent increase in the price of monoammonium nitrate has slowed down somewhat; factories still refrain from providing quotes to the general public and only offer prices to existing customers on a limited scale, with small quantities being supplied. Currently, the actual ex-factory price of 55% powdered ammonium nitrate in Hubei is around 3200 yuan per ton, and even smaller factories are charging this price. There are reports that some companies have raised the price of 55% powdered ammonium nitrate to 3300 or 3400 yuan, but these are only quotes for a limited range of customers. In Sichuan, the ex-factory price of 55% powdered ammonium nitrate is around 3150 yuan, while smaller factories in Yunnan sell it at 3050 yuan per ton. Ammonium nitrate is currently showing a slow upward trend. Some in the industry believe that its price will remain stable over time. So, could there be a slight decline in the price of ammonium nitrate? The author’s analysis is as follows. There is still demand in the coming period, but it remains to be seen whether it can meet the winter demand promptly. Small and medium-sized compound fertilizer manufacturers still remain cautious, but they have come up with new approaches in light of the persistently high prices of raw materials – namely turning their attention to phosphorus fertilizers with lower concentrations. However, the production volume of such phosphorus fertilizers is not large, and there is still a high demand for monoammonium phosphate on the downstream side. Even if they are forced to accept high prices, it will be difficult for them to purchase large quantities of monoammonium phosphate in the short term. In some areas, the autumn raw material of ammonium sulfate for large compound fertilizer manufacturers is still on its way; the strategy of purchasing as needed has enabled these companies to build up a certain inventory of ammonium sulfate. Although there will still be demand in the future, the factories’ demand during autumn is likely to be low. When demand in the Northeast will pick up is also a question that many industry insiders are concerned about. In fact, some of the large compound fertilizer manufacturers in the Northeast also purchase raw materials in batches, just like those in other regions; however, the frequency of such purchases is not as high, and the quantities involved are not very large. Smaller and medium-sized compound fertilizer companies in the Northeast tend to purchase raw materials closer to the season, while those that keep an eye on market trends will purchase them in advance depending on their own circumstances. As a result, it is difficult for the Northeast to carry out large-scale, centralized purchases of raw materials even if it tries to do so early on, and thus its purchasing activities may not achieve the desired results in the industry. Supply remains tight, but the operating rate is likely to rise slightly in the future. The overall operating rate for ammonium sulfate production is around 50%; several large factories in Hubei are still not operating at full capacity, and the time when they will resume operations is uncertain. Small factories in certain areas have temporarily halted production for maintenance, but they are expected to resume operations around the middle of the month. The demand for industrial monoammonium phosphate is gradually entering a off-season period; as a result, companies will increase their use of phosphoric acid for producing ordinary monoammonium phosphate, which will surely lead to an increase in the production of ordinary monoammonium phosphate. Safety and environmental inspections have become routine in recent years, and the impact on businesses’ ability to operate has decreased compared to previous years. Companies still have some domestic and export orders in the short term, resulting in supply constraints; however, in the long run, there remains a certain risk of supply pressures. Raw material costs provide decent support; it is difficult for costs to fall significantly or rise sharply. Recently, sulfur prices have remained relatively stable, without the sharp increases seen in earlier periods. The total inventory of sulfur at ports is currently around 2.09 million tons, an increase of about 104,000 tons on a weekly basis. Although this amount is about 954,000 tons less than it was in mid-October 2020, it remains quite high. In the short term, sulfur prices have remained stable; the price of granular sulfur at the Yangtze River port is around 1600 yuan, while the prices at the Puguang Wanzhou port and the Dazhou plant have stayed at 1590 yuan and 1510 yuan respectively for several weeks in a row. Due to recent restrictions on mining and halts in mining activities, the price of phosphate rock has risen. Currently, the price of 28% purity phosphate rock at factories in Hubei is around 520 yuan. However, it is reported that phosphate rock mines across various regions will start operating again around mid-month, and supply will gradually recover. As a result, it is unlikely that the price of phosphate rock will continue to rise in the short term; it is expected to remain stable for some time. The situation with liquid ammonia and sulfuric acid is roughly the same; it is currently mainly in a phase of rising prices. In summary, aside from supply and demand as well as raw material conditions, **policy trends are also a key focus at present; the industry is reluctant to take bold actions. In the short term, prices of ammonium nitrate should remain stable or rise only gradually, with a possible slight decrease in the future. (Zhao Hongye)