This week (9.23-27), domestic liquid ammonia continued its upward trend from last week. According to the Commodity Market Analysis System of Shengyi Society, the weekly increase of liquid ammonia in Shandong region was 0.71%. The main reason is that in the context of stable downstream demand, equipment maintenance and partial shutdowns in the northern region have eased supply pressure. At present, the mainstream price of liquid ammonia in Shandong region is between 2750-2880 yuan/ton.

The performance of equipment maintenance without reducing supply is tight

From the supply side, there is not much pressure on supply, and the production of equipment in the main northern production areas has decreased. Since September, the increase in maintenance equipment and temporary shutdown of ammonia companies have affected some production. Mainly manifested in Shandong, Hebei, Henan, and the Two Lakes region. As the weekend approaches, some manufacturers are tentatively raising their factory prices by more than 50-100 yuan/ton. The market shows a basic balance between supply and demand.

The downstream of the liquid ammonia industry chain has slightly improved

From the perspective of the liquid ammonia industry chain diagram, the downstream environment of liquid ammonia has slightly improved, while the upstream natural gas remains sluggish. This week, prices have slightly decreased, with a drop of 0.21%. In addition, the downstream sector has generally rebounded, mainly reflected in the strong rigidity of downstream demand and a slight rebound in agricultural demand; In addition, industrial demand remains primarily driven by essential needs. The main downstream products are urea (0.19%) and DMF (0.98%).

Downstream urea market slightly rebounds

In terms of downstream related products such as urea, the urea market has rebounded this week with a slight increase in prices. According to the Commodity Market Analysis System of Shengyi Society, the domestic urea market has risen by 0.19%. As of this Friday, the mainstream quotation for small and medium-sized particles in Shandong region is around 2150 yuan/ton. The increase in urea prices is very limited, mainly due to the delayed and unexpected agricultural demand, the weak autumn procurement season for compound fertilizers, and the market’s general wait-and-see attitude. The increase in shipments from urea factories is limited, but inventory pressure has slightly eased. The short-term supply and demand situation may maintain a basic balance, and prices will continue to consolidate.

Market forecast:

Business analysts believe that from a supply side perspective, there is not much pressure on the market supply, equipment production is normal, and inventory continues to deplete. The enterprise has a certain price mentality, but it is not greatly affected by the improvement of downstream demand. Urea lacks sustained upward momentum, and the power to convert equipment to urea is insufficient. The output of liquid ammonia still shows rigidity. Overall, it is difficult for a large-scale market oversupply to occur in the short term.

From the demand side, there is a weak peak season for autumn fertilizer preparation, and the market is still relatively cold. Agricultural demand remains reasonable and stable, with weak demand and moderate growth. From the perspective of industrial demand, the continuous decline in downstream acrylonitrile production rate may pose a constraint on liquid ammonia. The peak season of ‘Golden September’ may be difficult to fulfill.

Taking all factors into consideration, the recent stability of liquid ammonia supply and demand is expected to be the main factor, and it is expected that the market will experience narrow fluctuations in the short term, with no further significant upward momentum in prices.