Industry News
The favorable market for ammonium chloride dominates overall preference operation
From a price perspective, it is evident that the low price advantage of ammonium chloride can stimulate the purchasing enthusiasm of downstream markets to a certain extent. The mainstream ex factory quotation for urea in Henan region is around 2420-2430 yuan/ton, and the reference price for delivering dry ammonium is around 750-800 yuan/ton. The mainstream ex factory quotation for urea in Hubei region is around 2500 yuan/ton, and the mainstream ex factory quotation for dry ammonium is only about 700 yuan/ton. The mainstream ex factory quotation for urea in Northeast region is 2520-2550 yuan/ton, but the reference price for delivering local dry ammonium is around 900-950 yuan/ton, The recent trend of urea and ammonium chloride also depends on the changes in their supply and demand, as well as the degree of policy regulation.
The supply and demand in the urea market are relatively balanced in the short term, but under the influence of ensuring supply and stable prices and limited exports, there is still a relatively surplus in the long run, and market confidence is insufficient. Urea companies in the Jincheng area of Shanxi are still limiting production, while maintenance for gas head urea companies in the southwest has not yet begun. Local urea companies in Shandong, Northeast, and other regions have temporarily reduced their production. According to statistics from China Fertilizer Network, the daily production of urea is about 170000 tons. In the near future, urea companies in the Jincheng area of Shanxi will have some shutdowns. Starting from early December, some gas head urea companies in the southwest will gradually enter the maintenance period, but the daily supply should not be less than 170000 tons; The off-season of grassroots market demand results in low social inventory levels; In addition, the price of liquid ammonia has significantly fallen recently, and there is still room for price reduction. A few companies may shift their production focus to urea. However, the overall demand for urea is weak, and agricultural demand is in the off-season. Downstream and grassroots markets are mainly wait-and-see, with scattered and small reserves in some areas. Large and medium-sized traders also make appropriate reserves on dips; In addition, under the regulation of ensuring supply and stable prices, the storage time of urea has been relaxed, and the downstream reserve progress has slowed down; On demand procurement in the industrial sector, especially in compound fertilizer plants, the procurement progress is average, while the prices of small nitrogen fertilizers ammonium chloride and ammonium sulfate are low, which have a certain substitution for urea. Overall, urea has strong demand support in the short term, but under the measures of ensuring supply and stabilizing prices, urea is inevitably lacking momentum, and there is also room for price pressure to decline.
However, the ammonium chloride market is relatively optimistic, and the market should transition smoothly before the Spring Festival. If there is a loosening of local sales prices during the Spring Festival period, but there will be a demand gap in the later period, so there will be no significant fluctuations in the adjustment. In the short term, the procurement progress of ammonium chloride by compound fertilizer plants is still acceptable, with a significant low price advantage compared to urea, and little operational risk compared to other raw material fertilizers; The overall mentality of the market is acceptable, with no inventory pressure on production enterprises and support from pending orders; In addition, the export performance of ammonium chloride has been relatively good since the second half of the year, and the export volume is increasing, which has boosted the domestic market to a certain extent. But there are also bearish factors to be cautious of, such as sufficient supply of ammonium chloride. Firstly, the price of soda ash continues to rise, leading to higher production enthusiasm of enterprises. Secondly, this year, there is a significant release of new ammonium chloride production capacity, which has quietly changed the purchasing mentality of downstream markets, with on-demand procurement being the main focus. Overall, the short-term ammonium chloride market is dominated by positive factors, and the overall market preference is still in operation. Although it may not be particularly optimistic in the long run, there is no need to be overly pessimistic.
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