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Urea prices fluctuate back and forth like a swing, while ammonium chloride prices keep rising steadily. Author/Source: China Fertilizer Network Date: 2021-07-20 Clicks: 5 Urea prices have been seeing repeated changes, moving up and down as if on a swing; this is the current trend – prices drop and then rebound. Once they reach around 100 yuan per ton, they stabilize, with some transactions even showing slight declines； At this time, the price of ammonium chloride is on the rise; manufacturers have a sufficient amount of orders to fulfill, yet they often face difficulties due to insufficient production capacity. The supply of this product is tight, and downstream markets are quite active in making purchases. There is still some room for further increases in prices at the lower end. The trend of urea also influences ammonium chloride to some extent. Currently, the market trend for ammonium chloride in China remains positive; the ex-plant price of dry ammonium chloride often exceeds 1,000 yuan per ton, and the price gap with wet ammonium chloride is also narrowing. Supplies are in short supply, so companies are generally restricting new orders or stopping them for the time being, resulting in slow delivery times. Currently, the mainstream ex-factory price for dry ammonium in the North China region is around 1,020–1,050 yuan per ton, while in the Southwest region it is around 950–1,050 yuan per ton. Sales prices in the distribution market are also high, and prices can adjust flexibly. The future trend will depend on the impact of urea as well as changes in supply and demand. Firstly, urea prices remain high and stable, far exceeding those of ammonium chloride, which provides significant support for ammonium chloride prices. On the one hand, the supply of urea remains relatively stable; new production facilities are set to come online by the end of this month or next month. Of course, some individual companies have maintenance plans, which will result in certain adjustments in their production levels, but the overall supply should not change much, with the daily production volume remaining around 160,000 tons. However, demand is showing a weak trend; it is off-season in the agricultural sector, and sporadic additional orders as well as local agricultural needs provide only limited support. Large traders make their purchases based on demand, following the principle of buying at low prices and selling at high prices. Moreover, due to high urea prices, there are no plans for large-scale purchases ； Even if the production level of compound fertilizer manufacturers has seen a slight increase, it remains low. Additionally, the prices of various raw materials used in fertilizer production are high and supply is limited, which restricts the amount of raw materials that can be purchased. There is also significant pressure on pricing for compound fertilizers; as a result, some manufacturers have reduced production of certain product lines or opted to use other nitrogen-based fertilizers instead of urea ； Additionally, driven by the momentum of printing quotas, urea prices might see some increase, but given the policy pressures and the uncertainty surrounding them, the supporting effect of these printing quotas is likely to be limited. Secondly, the operating capacity of ammonium chloride manufacturers has remained low recently, resulting in a tight supply of goods. A few large ammonium chloride manufacturers in central China have reduced production slightly, while most ammonium chloride plants in eastern China are undergoing maintenance, which has led to a significant decrease in the supply of this product recently. However, these plants are now preparing to resume operations. In the northwest, a few ammonium chloride manufacturers have limited or stopped production due to environmental inspections. According to statistics from China Fertilizer Network, as of now the overall operational rate of the caustic soda industry has dropped to around 58.3%, with a daily production volume of approximately 29,200 tons. In the near term and until the beginning of next month, some ammonium chloride manufacturers that were shut down for maintenance or reduced production are preparing to resume operations. By the end of the month, one ammonium chloride manufacturer in Henan plans to carry out maintenance work; moreover, a few manufacturers have short-term maintenance plans for August. Over the next one and a half months, the operating capacity of these ammonium chloride manufacturers is likely to be around 60-70% of normal ； Moreover, with sufficient orders pending at various factories, and given that orders are accepted on a limited basis, prices will remain high. The demand for ammonium chloride remains relatively strong, with downstream buyers showing high purchasing enthusiasm. Firstly, high urea prices have prompted some compound fertilizer manufacturers to purchase ammonium chloride as a substitute for urea. Secondly, with the start of fertilizer production in autumn, there is considerable demand for ammonium chloride. Thirdly, the export market for ammonium chloride used in fertilizers, as well as nitrogen-phosphorus compound fertilizers, is performing well, with export volumes increasing compared to the same period in previous years. Fourthly, the sales of granulated ammonium chloride are progressing smoothly, with high production levels, which has led to an increased demand for powdered ammonium chloride. Overall, the low operating rates of ammonium chloride manufacturers have led to a tight supply and difficulty in finding available stock. It is expected that market conditions will remain favorable in the near term; prices for lower-quality products are likely to rise, while prices for higher-quality products may stay relatively stable with only cautious adjustments. (Tan Junying)