The center of gravity of urea can be shifted; ammonium chloride also has its own intentions”

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The focus of urea production can shift; ammonium chloride also has its own strategic objectives. Author/Source: China Fertilizer Network. Date: 2021-07-23. Clicks: 5. Urea prices remain high and stable; heavy rains in Shanxi and surrounding areas have disrupted transportation, leading to a slight drop in prices. In regions such as Hebei and Shandong, however, the supply of urea is relatively tight, resulting in a slight rise in prices. At this point, two aspects related to urea are worth noting: one is labeling, but exports remain restricted to some extent; furthermore, talks have been held with several major fertilizer companies to ensure supply for the domestic market and to stabilize prices. As a result, the degree of price adjustment for urea is likely to be moderated to some degree ； Secondly, if the shipping pressure on urea manufacturers increases, they may make appropriate adjustments to their production priorities. With domestic liquid ammonia prices rising sharply, demand from downstream industries is high, and these prices are expected to remain high in the near future; therefore, manufacturers can increase their production of liquid ammonia and reduce the production of urea. Meanwhile, ammonium chloride, whose price is already near historical highs, is keeping an eye on the trend of urea. 　　At present, ammonium chloride manufacturers in China have a sufficient backlog of orders, and it is still not uncommon for them to restrict new orders or refrain from taking any orders in the short term; however, their real intention is to secure orders at higher prices ； Currently, shipping times are slow in various regions, and available stock is scarce. The ex-plant prices of anhydrous ammonium in various regions generally range between 1,050 and 1,150 yuan per ton, and as long as there is stock available, traders raise their selling prices significantly. In terms of the nitrogen content as a single nutrient, the price gap between ammonium chloride and urea is narrowing; as a result, ammonium chloride manufacturers are also beginning to pay attention to the trends in urea prices. 　　Firstly, the supply of urea will decrease in the short term; domestic demand is low during this off-season, so there is a wait-and-see attitude regarding export progress. According to statistics from China Fertilizer Network, as of now the overall operational rate of urea production enterprises has dropped to 51.89%. Some large urea manufacturers have plans to carry out maintenance work at the end of this month and in the following month; meanwhile, other companies are preparing to resume production or have plans to put new production facilities into operation. In the future, their daily production volume should be able to return to around 150,000–160,000 tons ； The price of liquid ammonia is rising sharply; if urea faces pressure, it is possible that some companies will shift part of their production to liquid ammonia in order to reduce the pressures on urea production ； Currently, it is the off-season for agricultural demand in the country; large and medium-sized traders are cautious about replenishing stock of urea at high prices. Industrial compound fertilizer manufacturers are operating at a reduced capacity, facing significant cost pressures, which reduces their enthusiasm for purchasing urea ； The tender for urea imports issued by RCF in India was opened today; the latest shipping date is August 31. Twelve suppliers have submitted bids, offering a total supply of 1.6511 million tons, of which 711,500 tons are intended for the east coast and 939,650 tons for the west coast. However, the prices, the final amount awarded to successful bidders, and China’s domestic policies remain unclear, so the impact on domestic market conditions is likely to be limited for now. 　　Secondly, the supply of ammonium chloride in the market is tight, and it will remain insufficient for a long time to come. Recently, the operating rate of ammonium chloride production plants dropped to around 55%; although it has now risen to nearly 70%, some of these plants in the East China, Central China, and Northwest China regions have plans to shut down for maintenance at the end of the month and during August ； In addition, some markets are affected by rainfall or high temperatures, so it is possible that there may be temporary reductions in operational capacity or short-term shutdowns of facilities in certain areas ； Moreover, ammonium chloride manufacturers have no inventory, with a sufficient number of orders pending shipment; partial delivery delays are occurring and the arrival of goods is slow, resulting in ongoing supply constraints that are unlikely to ease significantly in the short term. 　　Once again, with urea prices remaining high, the demand from compound fertilizer manufacturers for ammonium chloride has increased significantly. On the one hand, with the onset of autumn fertilization, production at compound fertilizer manufacturers is slowly picking up again; there is no inventory of the raw material ammonium chloride, and demand from essential sectors is on the rise ； On the other hand, the demand for extruded ammonium chloride particles as well as export volumes are quite substantial, and traders’ inventory levels are relatively low ； In particular, traders are quite willing to hold inventory, resulting in limited available spot goods in the market ； Furthermore, in the first half of this year, China’s exports of ammonium chloride used as a fertilizer, as well as nitrogen-phosphorus compound fertilizers, increased significantly. According to customs data, the total export volume of ammonium chloride for fertilizer use was 697,000 tons in the first half of this year, while the total export volume of nitrogen-phosphorus compound fertilizers was 767,600 tons – an increase of 153,000 tons and 300,000 tons respectively compared to the same period last year, providing significant support for the domestic market. 　　Overall, with urea prices remaining volatile at high levels, it is inevitable that compound fertilizer manufacturers will turn to ammonium chloride as a substitute for some of the urea they use. At the same time, the supply of ammonium chloride in the market is tight, and there is strong demand from downstream users; it is difficult for those in the ammonium chloride industry to hide their true intentions. As a result, they will inevitably take on some orders in order to keep driving up market prices. (Tan Junying)