In August, domestic liquid ammonia gradually bottomed out and stabilized, and ammonia prices continued to fluctuate upwards in September. According to the Commodity Market Analysis System of Shengyi Society, the price of liquid ammonia in Shandong Province increased by 9.81% in September. The main reason is that in the context of stable downstream demand, there are more equipment maintenance in the northern region, leading to a decrease in operating rates and easing of supply pressure. At present, the mainstream price of liquid ammonia in Shandong region is between 2750-2900 yuan/ton.

The tight performance of intensive maintenance and supply of equipment

In terms of supply, the main issue is the shortage of supply. In September, ammonia plants generally reduced their supply, and the production of equipment in the main northern production areas decreased. Since September, the increase in maintenance equipment and temporary shutdown of ammonia companies have affected some production. Mainly manifested in Shandong, Hebei, Anhui, and the Two Lakes region. Especially in the first week, the increase was significant, and manufacturers concentrated on raising the ex factory price by more than 300 yuan/ton. Subsequently, with the recovery of supply, ammonia prices experienced a slight correction, and the market returned to an upward trend in the second half of the month. The price increase continued until the end of the month, and the current market performance shows a basic balance between supply and demand.

The overall improvement of the industrial chain is not significant, and the downstream demand of the “Golden Nine” is insufficient

From the diagram of the liquid ammonia industry chain, it can be seen that the upstream and downstream environment of liquid ammonia has not improved significantly, and the upstream natural gas has not continued its upward trend in August. As of the end of September, the decline has been 6.41%. Especially in the downstream sector, the trend is still generally cold, with more declines and less gains. This is mainly reflected in the slow start of downstream demand, the sluggish peak season of “Golden September”, and the downward trend of terminal production in major industrial demand areas. The market relies heavily on the demand for agricultural compound fertilizers, but the current increase in compound fertilizer production has not met market expectations. The market is mainly driven by rigid demand, and the demand side is restricting the increase in ammonia prices. This round of rise is mainly driven by the supply side.

Especially downstream urea has shown poor performance, according to Shengyi Society, urea fell by 0.74% in September. On the one hand, the supply performance is sufficient, but domestic urea manufacturers have insufficient ammonia conversion and high inventory. Combined with weak exports. On the other hand, there was no significant increase in downstream procurement volume, and the market performance remained calm.

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 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, the peak season for autumn fertilizer preparation is not prosperous, but the market is still relatively cold. Agricultural demand remains stable, but the increase is slow. 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 “Silver October” is also difficult to predict.

Taking all factors into consideration, the price of liquid ammonia will tend to adjust narrowly in the near future with a basic balance between supply and demand, and there is little possibility of a significant rise or fall, with range fluctuations being the main trend.