This week (3.10-17), the domestic ammonia market generally fell, with prices in major production areas such as Shandong, Hebei, Shanxi, and Lianghu experiencing varying degrees of decline. According to the monitoring of the Business News Agency, as of Friday, the drop in liquid ammonia in Shandong Province was 5.67%. This is mainly due to the centralized resumption of production of maintenance enterprises in central and southern China, resulting in a surge in supply, coupled with a negative agricultural demand window, and a significant price decline due to the imbalance between supply and demand in the market. Currently, the mainstream price of liquid ammonia in Shandong is 4100-4300 yuan/ton.
From the perspective of supply, the overall operating rate of domestic manufacturers has increased, especially in the northern region, where manufacturers’ devices are operating normally, gradually accumulating inventory to guide manufacturers to continuously reduce their listing prices. According to the monitoring of the Business News Agency, manufacturers in Shandong generally lowered their prices by around 200 yuan/ton within the week. Many devices in the southern region have resumed production, and the supply increase has further exacerbated the contradiction between supply and demand in the market.
On the demand side, the tight supply and demand situation in the ammonia market has significantly eased in the first ten days, and agricultural demand has weakened, but industrial demand cannot be followed up in a timely manner. It is also reasonable for the high price of liquid ammonia to fall back. In terms of downstream urea, according to the monitoring by the Business News Agency, urea continued its decline, with a weekly decline of 0.82%. Due to the withdrawal of agricultural demand and the end of the peak season of returning green fertilizer, the procurement volume of composite fertilizer and board market declined. The weakening of downstream demand support is an important reason for the decline of liquid ammonia.
From the perspective of the industrial chain, the cost side also remained negative. In particular, the price of liquefied natural gas fell significantly, with a weekly decline of 7.3%. The sharp decline in natural gas has had a significant impact on southwest gas head ammonia companies, providing ammonia companies with conditions for price reduction sales under the generally light market volume. The coal market has maintained a weak range of adjustment and has also weakened to some extent this week, with a weekly decline of 0.87% for steam coal. Overall, the ammonia market is facing downward pressure on costs.
Future Forecast:
Analysts from the Business Society believe that from the supply side, some ammonia enterprises may have switched to urea production or eased the supply pressure in the ammonia market in the near future, which may result in insufficient action in the future ammonia market. However, the demand side will still face pressure in the future, with agricultural demand falling into a window period and industrial demand also weak. Therefore, the supply and demand game will intensify in the near future. Superimposed by the negative impact of lower pressure on upstream raw coal and natural gas, the ammonia market is expected to maintain a weak overall pattern in the near future.
| PVA |