In just 20 days, the synthetic ammonia index rose by 321 points!

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In just 20 days, the synthetic ammonia index rose by 321 points! Author/Source: Date: 2016-11-24 Clicks: 4 The domestic ammonia synthesis market continues to rise, with a fairly rapid upward trend. The data shows that the domestic synthetic ammonia index was 2,028 on October 27, and it rose to 2,349 on November 16. In just 20 days, the domestic synthetic ammonia index increased by 321 points, representing a growth rate of 15.83%. Currently, some people in the industry are quite confused. Why is the price of synthetic ammonia continuing to rise, and what is the potential for further increases in the market ahead? 　　Rising costs and demand are driving the focus of transactions in the synthetic ammonia market upward. Looking at raw materials first, coal prices have more than doubled, putting significant pressure on costs. Efforts are being made to regulate the coal market, with companies even being asked to reduce prices; however, since it is currently the heating season, supply is tight, and coal prices will remain high in the short term, keeping the production costs of synthetic ammonia at relatively high levels. 　　Secondly, in terms of export volumes, these have remained relatively stable recently; however, some manufacturers have seen a decrease in their export volumes. As the price of urea continues to rise, there is a possibility that export volumes of liquid ammonia will decline as well. 　　Again, looking at downstream products, the price index for urea has risen by 96 points since early November. Given the current supply and demand situation, there is still room for further increases in the urea market ； At present, the operating rate of facilities in the compound fertilizer market is recovering slowly. However, in the middle and late part of November, as more companies set prices and the winter storage situation becomes clearer, dealers will be more inclined to stock up, which could lead to a greater increase in the operating rates of these facilities ； Supported by factors such as favorable transportation conditions and rising raw material costs, the price of monoammonium phosphate has increased; with growing demand, there is a possibility that production capacity will rise as well. 　　It can be seen that the demand for synthetic ammonia in the fertilizer sector is on an upward trend, and as downstream production activities increase, there is a possibility of further growth in demand. Demand in the industrial sector is relatively normal, with average performance. Overall, there is a possibility of continued growth in demand downstream in synthetic ammonia. Rising costs and expected increases in future demand are driving the focus of transactions in the synthetic ammonia market higher and higher. 　　Expect another upward move once winter storage begins. In terms of production costs, the current cost of producing synthetic ammonia is around 2,000–2,250 yuan per ton. At current prices, the prices offered by leading companies are generally above their cost levels, but their profits are not very substantial. As the price of urea continues to rise, there is an expectation that exports of synthetic ammonia will decrease. However, once winter storage season begins and the fertilizer market enters its peak period, demand is likely to increase, which will gradually reduce the supply-demand imbalance; as a result, the price is still likely to keep rising. However, given the current supply and demand situation, there is still resistance to high prices in certain areas; the upward momentum in the market will likely ease in the short term, with prices possibly rising again once winter storage begins. (Agricultural Inputs Market Report)