In the second half of April, the domestic ammonia market began a cliff like decline, with prices in major production areas such as Shandong, Hebei, Shanxi, and Lianghu all falling below a thousand yuan. According to the Commodity Market Analysis System of Business Society, as of April 18th, the monthly decline of liquid ammonia in Shandong region exceeded 20%. The mainstream price of liquid ammonia in Shandong region is as low as the range of 3000-3200 yuan/ton.

Amidst the oversupply and the double silence of agricultural and industrial demand, the ammonia market has continuously hit new lows and has now fallen to a new low since 2021.

From a supply perspective, the domestic supply performance is abundant, with the release of ammonia in the main production areas of China approaching a high level of 200000 tons last week. The accumulated inventory of manufacturers has guided them to continuously reduce their factory prices. Since the beginning of this week, the prices quoted by manufacturers have not stopped falling. On the 18th, a large Shandong factory has also lowered its daily price by 300 yuan/ton. Especially, the recent arrival of imported goods in Hong Kong has had a significant impact on the already oversupplied domestic market, and has even sparked market panic. Although some manufacturers have been undergoing maintenance since the middle of the year, the supply pressure remains prominent.

From the perspective of the industrial chain, the cost side remains bearish. The price of liquefied natural gas fell by 2.41% in April. The market is hovering at a low level, and the decline in natural gas continues to bring pressure to the ammonia prices of Southwest gas head ammonia companies. Due to the continued weakness of the coal market, according to monitoring by Business Society, thermal coal has fallen by nearly 10% since April. Due to the fact that coal fired ammonia companies still have profit margins, they are more motivated to lower prices and ship out in the face of sluggish demand and reduced orders. Overall, the cost side is bearish for the ammonia market.

On the demand side, the market has formed a situation where agricultural demand and industrial demand are both weak. On the one hand, agricultural demand has weakened, and the first half of April is during the agricultural procurement window period. The traditional off-season has led to a decrease in downstream purchase orders. The shipment volume of compound fertilizers and phosphate fertilizers has plummeted, with a particularly significant drop in ammonium chloride. As of now, it has dropped by 19.21% in April. Furthermore, industrial demand has also shown weakness, with downstream factories purchasing on demand and reducing production schedules. In addition, according to industry insiders, the external demand for liquid ammonia is also average, with foreign devices gradually recovering and liquid ammonia exports facing obstacles. The surge in import volume and the decrease in export orders have further intensified the supply-demand contradiction.

Future Market Forecast:

Analysts from Business Society believe that on the cost side, due to the sluggish coal and natural gas market, coal and gas leading ammonia companies still face negative impacts from costs in the short term. On the supply side, as ammonia prices continue to decline, manufacturers’ production schedules have started to decrease since the middle of the year. However, some ammonia companies such as Hubei Jinniu are facing resumption of production, and Juhua also has plans to increase its burden. So the pressure on the supply side in the short term cannot be underestimated. On the demand side, it is unlikely that there will be any improvement in industrial and agricultural demand in the near future. Overall, it is expected that there is still room for a downward trend in the ammonia market, but the decline will be narrowed by the impact of reduced emissions.