Environmental inspection is coming – what will happen to liquid ammonia?

Thread Content

Environmental inspections are coming – what will happen to liquid ammonia? Author/Source: Date: 2016-09-01 Clicks: 16 The new environmental law, known as the \"strictest in history,\" has received considerable attention since it was implemented over a year ago. This REN conference has launched inspections to enforce environmental protection laws; it will adhere to a problem-oriented approach, fully address societal concerns, and focus on key areas. The law enforcement inspection team plans to be divided into 5 groups, which will start going to 8 provinces and autonomous regions—Hebei, Shanxi, Heilongjiang, Henan, Guangxi, Guizhou, Yunnan, and Ningxia—to carry out inspection work starting in June. An analysis will be conducted to determine the impact of this inspection on the liquid ammonia market. Among the more than 40 companies under surveillance, it was found that most liquid ammonia manufacturers have not been affected by environmental inspections; only those in Henan province had to suspend operations due to such inspections. Some units were originally scheduled to be restarted at the beginning of August, but are still awaiting notification for restart. The large number of parking spaces in the Henan market has not led to a significant rise in that market. Since last week, the market in Henan has shown little variation; the prevailing selling price remains at 1,880–1,950 yuan per ton on an acceptance basis. There are several reasons why prices have not risen significantly. Firstly, a company in the Henan region stopped producing urea, resulting in a large amount of liquid ammonia being released onto the market at low prices, which had an impact on the local market. Secondly, the prices of fertilizers such as urea remained low, preventing any boost in market activity. Additionally, demand remained weak on the supply side, making it difficult to increase sales volumes. In the early stage, due to the low operating load of the facilities around Henan, a large amount of products were sent out, but as these facilities gradually resumed operation, the volume of products sent out has been decreasing. The liquid ammonia market in other regions affected by environmental inspections remained unaffected, with normal shipments and steady trading activity. Although the liquid ammonia market saw an overall upward trend in July, this was mainly due to unexpected shutdowns of production facilities; as these facilities gradually resumed operation, the market situation began to stabilize towards the end of July. Affected by the continuous decline in urea prices, shipments of liquid ammonia began to face pressure, and the market entered a downward trend at the beginning of August. The facilities in the Henan region that were shut down due to environmental inspections have not yet been restarted; as a result, prices there remain high, and there has been no overall decline in market conditions for now. However, sales both domestically and overseas have decreased, leading to increased shipping pressures, and the market is likely to face a downward trend in the future. From this perspective, the current environmental inspection has little impact on the liquid ammonia market; most of the market remains affected by weak demand and continues to operate in a weak state. The previous price increases were merely temporary, and it is recommended to closely monitor the recovery of manufacturers’ production facilities as well as changes in export volumes going forward. In the absence of positive factors supporting demand, the market is expected to show a trend of steady decline