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Will Yiammon change? Author/Source: China Fertilizer Network Date: 2021-09-22 Clicks: 5 There have been discussions this year regarding whether tariffs should be imposed on fertilizers, and now that the fourth quarter is approaching, calls for imposing tariffs on ammonium nitrate have grown again. At present, in the author’s opinion, the possibility of imposing additional tariffs cannot be ruled out, but the probability is relatively low. The brief analysis is as follows: 1. The production capacity for monoammonium remains excessive. It is undeniable that the export volume of monoammonium phosphate this year has indeed increased significantly compared to previous years. Customs data show that the export volume of monoammonium phosphate from January to July 2021 was 2.5722 million tons, while the export volume during the same period in 2020 was 1.436 million tons. However, the issue of ammonium sulfate production must be taken into consideration. According to rough calculations by China Fertilizer Network, the actual production volume of ammonium sulfate from January to July 2021 was 9.0525 million tons, while the corresponding figure for the same period in 2020 was 6.6301 million tons. Over the past two years, the industry has been aware that the overall inventory of monoammonium is low. With such minimal inventory levels, the data shows that the surge in exports of monoammonium this year has not affected the domestic supply of this substance; rather, it has helped to alleviate the issue of overcapacity in its production. Although in recent years some ammonium nitrate producers have often failed to operate at full capacity for various reasons, their planned annual production volumes generally remain met. Moreover, in recent years these companies have delayed their regular maintenance work in order to fulfill pending orders; therefore, a shortage of ammonium nitrate supply does not necessarily indicate that the overall overcapacity in this sector has been significantly reduced. Exporting ammonium nitrate remains an essential option for these companies. II. At the current stage, domestic prices have not exceeded historical high levels. According to historical data from Zhongfei Net, in Hubei province, the mainstream ex-factory price for 55% powdered ammonium nitrate reached as high as 4,100 yuan per ton around April 2008. This year, the highest mainstream price for such ammonium nitrate is around 3,600 yuan per ton, which is significantly lower than the high prices seen in 2008. Currently, the mainstream ex-factory price for 55% powdered ammonium nitrate in Hubei is around 3,500–3,600 yuan per ton, with actual transaction prices being lower than these quoted amounts. It is reported that the lower-end ex-factory price in Hubei is around 3,350–3,400 yuan per ton, while the export price for 55% powdered ammonium nitrate in Bayuquan, Northeast China, is around 3,480 yuan per ton. It is clear that the price of ammonium nitrate has not reached its peak, and the current price level represents a relatively reasonable figure after a recent downward adjustment. At present, the cost of raw materials for monoammonium nitrate is relatively high. Roughly speaking, the total cost of high-quality 55% powdered monoammonium nitrate in Hubei is around 3250–3300 yuan per ton. In terms of raw materials, the price of monoammonium nitrate can be considered reasonable; however, on the surface it does seem high. In the short term, it is unlikely that the cost of raw materials for monoammonium nitrate will drop significantly. Recently, phosphate rock prices have risen due to supply constraints, sulfur prices are fluctuating within a narrow range at high levels, and the price of synthetic ammonia remains high as well. Third, policies such as “ensuring supply and stabilizing prices” are in progress. On September 6, the **National Development and Reform Commission convened the first meeting on the mechanism for ensuring the supply of fertilizers and stabilizing their prices. The meeting decided that effective measures should be taken to ensure a stable supply of fertilizers and maintain their prices, thereby protecting farmers’ enthusiasm for growing crops. The policies aimed at ensuring supply and stabilizing prices have been in place for some time now, and the price of phosphate ammonium has remained relatively stable, which shows that **these price-stabilization policies are effective; various factors are taken into consideration as part of a comprehensive planning approach. Ammonium monohydrate and diammonium producers ensure domestic supply while exporting their products; therefore, the author believes that as long as these companies keep up with the demands, there is likely to be no need for additional tariff measures. Otherwise, market prices could become unstable, experiencing a period of sharp increases followed by declines, resulting in chaos in the market – a situation that would be counterproductive. In summary, at present, **policies are the main factor that determines market trends. Considering the situation of Yian itself, it is unlikely that any problems will arise; focusing on doing well in its own operations is sufficient. Although policies such as the controls on energy consumption and environmental inspections may give Yian reasons to raise prices, this situation is temporary. In the long run, we should trust the ability of macro-control; it will be difficult for Yian to experience significant price fluctuations. (Zhao Hongye)