Will ammonium reach a bottom or continue its downward trend?

Thread Content

Will ammonium reach a bottom or continue its downward trend? Author/Source: China Fertilizer Network Date: 2021-09-06 Clicks: 7 The fertilizer market has shown some improvement recently, with urea stopping its decline and experiencing a rise; after a sharp increase, its price has now stabilized. Some in the industry believe that urea prices may remain stable for some time, mainly due to the approaching demand. With the recovery in urea prices, the fertilizer market might see a turnaround. Recently, low prices have appeared in the ammonium nitrate market; the wholesale price of 55% pure ammonium nitrate powder produced in Hubei has dropped below 3,300 yuan per ton. In some small factories in Hubei, the selling price at the lower end may even fall below 3,300 yuan in terms of spot rates. Some companies have maintained stable quotes, while others have appropriately reduced their quotes or suspended providing them; they believe that quotes are of little use at the moment and have adopted a strategy of negotiating on a case-by-case basis. The main reason for this situation is the low activity in the monoammonium market. The demand side is indeed not very favorable; compound fertilizer manufacturers are having poor sales performance. In some areas, companies have accumulated excess inventory of compound fertilizers and have temporarily stopped production. As a result, the consumption of ammonium nitrate, which is used as a raw material by these companies, is slow. It is reported that compound fertilizer manufacturers are currently urging ammonium nitrate producers to deliver orders placed earlier. Some smaller compound fertilizer factories are still operating at limited capacity due to high raw material costs and a lack of stockpiles, and some have even ceased production for extended periods. Some companies have no plans to resume production at the moment and are waiting to see how things develop. Although fertilizer manufacturers and traders in the Northeast are paying more attention to monoammonium phosphate, they actually use it less; they are unwilling to pay high prices for it. Some traders and companies even try to get rid of their stock as quickly as possible. Some in the industry believe that both the demand in autumn and the winter storage period in the Northeast could be delayed. However, some in the industry believe that there may be a supply shortage of monoammonium in the future, so it is necessary to keep stock on hand. For ammonium sulfate producers, the pressure is not high at the moment, but it does exist. There has been a lack of new orders recently, and the export of granular ammonium sulfate is gradually being completed. The limited supply of raw materials for domestic ammonium sulfate production has helped to alleviate the pressure on domestic supplies to some extent. However, with weak demand, this also creates certain negative factors for ammonium sulfate producers. Recently, some industrial facilities have begun maintenance work; two companies in Henan started such work in the past few days and are expected to resume operations by the end of September. Some facilities at a large plant in Anhui have also begun scheduled maintenance, and it is reported that certain companies in Hubei and Sichuan have plans to carry out maintenance as well. Companies are easing pressure by restricting production, and high raw material prices have helped to prevent a sharp decline in the demand for monoammonium in the Northeast before its demand starts to rise. Speaking of raw materials, prices remain high. Following recent continued increases, sulfur prices have now fluctuated slightly; the price of granular sulfur at the Yangtze River port is around 1935 yuan, while the prices of Puguang sulfur at the Wanzhou port and the Dazhou plant in China are 1920 yuan and 1830 yuan respectively. The price of sulfuric acid remains stable at high levels; currently, the delivery price for 98% industrial-grade sulfuric acid in Hubei is around 1150 yuan. Phosphorus ore supply is tight and prices are high; it is said that these prices will continue to rise in the near future. It is reported that the price of phosphorus ore with a 28% purity level arriving in Hubei is set to rise to around 660 yuan. It can be seen that raw materials provide a certain level of support for the cost of monoammonium. In summary, demand for monoammonium nitrate has been weak recently, putting pressure on companies. However, these firms will try to alleviate this pressure by adjusting their production levels and formulating pricing strategies. Additionally, the strong support provided by raw material costs means that overall prices for monoammonium nitrate may decline, and actual transaction prices could continue to fall. Yet, there is no likelihood of a significant drop in the short term; attention should be paid to demand conditions in regions such as the Northeast in the future. (Zhao Hongye)