The nitric acid market struggles to rise

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Weak Demand Driving Up Nitric Acid Prices Author/Source: China Chemical Industry News Date: 3-15-2019 Clicks: 4 On March 13, the prevailing price of nitric acid in the Shandong market was 1,400–1,450 yuan per ton; in the Jiangsu market it was 1,500 yuan per ton. In both cases, these prices were about 50 yuan higher than those of the previous week. 　　“This week, driven by rising prices of synthetic ammonia, the nitric acid market saw a slight increase. However, due to concentrated supply, **transportation is restricted during this period, and the demand from small and medium-sized enterprises downstream has not yet emerged; as a result, the nitric acid market lacks the momentum to rise in the short term. ” According to analyses by industry experts such as Wang Xingguo, a sulfur industry analyst at Longzhong Information. 　　In the near term, the supply of nitric acid will remain high. 　　According to Wang Xingguo, the nitric acid production facilities that had been shut down earlier, such as Junma Chemical, Linyi Luguang, Hangzhou Jinfuchun, and Huaihe Chemical, have gradually resumed operations recently, while those that are already in operation are increasing their production capacity. As of March 8, the overall operating rate of the nitric acid plant was 68%, up 10% from the end of February. In addition, the shutdown for maintenance of downstream nitric acid-related facilities such as Cangzhou Dahuahua has also led to an increase in the export volume of nitric acid, thereby increasing the pressure on market supply. 　　On the demand side, demand from large downstream factories remains stable at present, but the main small and medium-sized enterprises have not yet started operations, making it difficult to drive an increase in demand. 　　Looking at aniline, the largest downstream product of nitric acid, last year the addition of new production capacity for aniline in China as well as the restart of shut-down facilities led to an increase in supply; as a result, the aniline market was characterized by low prices, and this weak trend is expected to continue in the near future. 　　“The unrestrained expansion of aniline production has led to an imbalance between supply and demand in the market. Coupled with Sino-US trade tensions and poor export channels, price wars among aniline manufacturers are intensifying. ”said Yang Xue, supply manager at Tianjin Tecton Civil Explosives Co., Ltd. On March 9, the domestic unified price of Shandong Jinling Aniline, known as the \"wind vane\" for aniline prices, was reduced by 200 yuan. The execution price for Dawang Company was 5,180 yuan, while the acceptance price was 5,300 yuan; the execution price for Dongying Company was 5,200 yuan, with an acceptance price of 5,320 yuan. The declining market conditions for aniline make it difficult to provide strong support for the nitric acid market. 　　“This year, significant new production capacity was added for TDI, the second-largest downstream product of nitric acid, resulting in market prices remaining stable at low levels. On March 12, the TDI price in the East China region was 13,200–13,300 yuan, down 100 yuan from the previous day. Furthermore, many TDI manufacturers have recently been on the verge of losses, with reduced operating capacity that makes it difficult to drive an increase in demand for nitric acid. ”Wang Xingguo said. 　　The main downstream market for dilute nitric acid, namely adipic acid, is also performing weakly. Due to the lack of significant improvements in the downstream market for adipic acid, the market is still in a period of inventory reduction. Coupled with the decline in the price of raw material benzene, the price of adipic acid has dropped recently. On March 12th, the acceptance price in the East China region (supply from Shandong) was 8,600–8,800 yuan, a decrease of 150 yuan. 　　Furthermore, to ensure safety during that period, all shipments heading north were restricted; nitric acid from areas in the north such as Hebei had to be sent back to Shandong, which resulted in an increase in the supply of such goods in Shandong. In Shandong Province, due to environmental protection warnings, the recovery of acid-using enterprises downstream was slower than expected, resulting in a decrease in overall demand. The overall supply in the nitric acid market is sufficient, which has driven down product prices. 　　“This week, the price of synthetic ammonia in Shandong rose by 350–400 yuan, while the cost of nitric acid increased by 100–150 yuan. However, with the cost of nitric acid in Shandong region currently at 1,400 yuan, companies are still operating at or just above break-even. Based on theoretical costs, if the market price of nitric acid in Jiangsu and Anhui falls below 1,370 yuan, and the price in Henan is below 1,300 yuan, the production profit will be less than 100 yuan. Once market prices reach the stop-loss point, companies will choose to suspend operations due to cash flow issues. Although rising prices of synthetic ammonia are putting cost pressure on nitric acid manufacturers, the supply-demand imbalance is unlikely to ease in the short term; therefore, market gains are expected to be limited in the near future, with a potential market turnaround occurring around the end of March to early April. ”Wang Xingguo analyzed.