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How much further will the price of synthetic ammonia rise? Author/Source: Gold and Silver Island Date: 2016-11-15 Clicks: 1 Since the end of November, the domestic synthetic ammonia market has shown a continuous upward trend. As can be seen from the trend chart, after a brief decline in late October, the domestic mainstream market entered an upward trend. Especially in November, the increase in prices in the market widened, and the market conditions stabilized on November 9th. During these short period of about 10 days, the domestic ammonia synthesis market saw a price increase of 225–285 yuan per ton. Is the recovery in market conditions on November 9th a brief pause or a reversal in trend? Can the upward trend of synthetic ammonia continue smoothly? Treasure Island will be analyzed from the following aspects. First, from the perspective of production costs, the current average price of coal is between 800 and 900 yuan per ton; accordingly, the production cost of synthetic ammonia is between 2000 and 2250 yuan per ton. It is possible that some manufacturers purchase coal at prices higher than this figure. It is evident that at present, the profits of most ammonia synthesis companies remain relatively low; in fact, some companies are still operating below their cost levels. From a unilateral perspective, the synthetic ammonia market still has room for growth in the future. Secondly, in terms of ammonia synthesis supply, most manufacturers’ plants are operating normally at present; however, some manufacturers have lower production levels due to coal shortages, and there are also some whose plants are not operating stably, resulting in low export volumes. Later, as the equipment gradually recovered, there was a trend of increasing exports. However, the price of urea is currently high. If this trend continues, the amount of liquid ammonia produced by the plants that combine liquid ammonia production with urea production for export will decrease, and as a result, the overall volume of liquid ammonia exported will not change significantly. Once again, from the perspective of demand for synthetic ammonia, the fertilizer sector is currently on the sidelines; no winter storage policies have been introduced yet, and winter fertilizer procurement has not begun. The production levels of compound fertilizers and phosphate fertilizers remain relatively low, with demand in the agricultural fertilizer sector remaining fairly weak ； Demand in the industrial sector is moderate; manufacturers of acrylonitrile and caprolactam purchase materials as needed, with no one currently holding large stockpiles. On the side of power plants, bidding prices are being used for purchases, and there is little novelty in demand from the industrial sector. It is evident that there is no novelty in current demand, with downstream users and distributors purchasing as needed. However, following the meeting on phosphorus compound fertilizers, order-taking sessions by various manufacturers are likely to take place in mid-to-late November. At the same time, the policies regarding winter storage will become clearer, offering room for an increase in demand in the agricultural sector. Additionally, according to JinYinDao, manufacturers currently face little inventory pressure, and there are no significant obstacles to short-term sales. It can be seen that the willingness to maintain high prices in the short-term ammonia synthesis market remains strong. As winter storage progresses, demand shows an upward trend. Coupled with persistently high costs, although some downstream users and traders are resistant to high prices at present, there is little room for a decline in synthetic ammonia prices in the short term. In the near term, the synthetic ammonia market will remain in a state of consolidation at high levels, with potential for further price increases in regions such as East China and Central China. It is recommended that industry professionals pay attention to changes in the export volume of liquid ammonia as well as news regarding winter storage policies. (Yuan Ning)