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SunSirs: Demand Releases and Ammonium Chloride Prices Rise Sharply
March 20 2020 11:15:56SunSirs(John)

Ammonium chloride prices have been rising since March

The ammonium chloride commodity index on March 19 was 75.15, an increase of 2.08 points from the previous day, and a decrease of 25.88% from the highest point of the cycle at 101.39 (2013-03-14), an increase of 58.58% from the lowest point of May 07, 2015, at 47.39. (Note: Period refers to 2013-02-01 to present)

Since March, with the recovery of the spring ploughing market, the ammonium chloride market has continued to pick up and prices have soared. According to SunSirs monitoring, the price of domestic dry ammonium chloride for agricultural use was 525 RMB/ton in early March. As of March 19, the price of dry ammonium chloride for agricultural use rose all the way to 632 RMB/ton, an overall increase of 20.48% from the beginning of the month. There are three specific reasons:

1. Demand releases and shipments of ammonium chloride  increases

First of all, the peak period of traditional spring fertilization and fertilization is March and April, and it is also the traditional peak season of fertilizers. In particular, soybeans, corn, and some vegetables, such as crops suitable for sowing and growing in March, have a strong demand for chemical fertilizers, driving up the price of fertilizer products such as ammonium chloride.

Secondly, the downstream compound fertilizer manufacturers began to increase the resumption of production in March, and the operating rate has increased significantly compared with the previous period, resulting in an increase in the purchase of ammonium chloride since the resumption. According to the understanding of SunSirs, due to the delay in the start-up period, the operating rate of compound fertilizer companies in the country in mid-February was only 15.4%, the lowest operating rate in history. At present, the overall operating rate of large-scale compound fertilizer companies nationwide has risen sharply to 62%, and it is expected that it will continue to rise in the short term in order to appropriately increase inventory storage and meet the fertilizer needs for the entire spring ploughing stage.

2. Replenishment and free high-speed policies accelerate market recovery

According to the understanding of SunSirs, due to the market downturn in the early part of the Spring Festival, some traders and downstream reserves in the early part of the Spring Festival were lower than in the past, which caused a large amount of replenishment at the low level of the spring ploughing season. Coupled with the high-speed and free preferential policies introduced by the country, the industrial chain can fully enjoy the preferential transportation costs, and the strong willingness to purchase and ship in the industrial chain has accelerated the market recovery.

3. Urea prices takes the lead and promote the rising atmosphere of ammonium chloride

Since mid-February, the price of urea has continued to rise first, coupled with the large price difference between urea and ammonium chloride, the price advantage of ammonium chloride is obvious, and the atmosphere of ammonium chloride has been driven by the side. According to the monitoring of SunSirs, the urea price was 1,676 RMB/ton in early February, and the urea price was 1,793 RMB/ton as of March 16, an overall increase of 6.98%.

 

Market outlook

High operating rate of ammonium chloride may put pressure on the supply side in the future

The Ammonium Chloride Analyst of SunSirs believes that at present the domestic ammonium chloride market is still in sufficient demand, and ammonium chloride manufacturers have more orders to be issued, and even some companies have suspended orders, forming a strong support for the ammonium chloride price. But on the other hand, the current operating rate of ammonium chloride in China is relatively high, which may put pressure on the supply side in the future. Once demand starts to weaken, it will once again suppress the price of ammonium chloride. According to the understanding of SunSirs, the current operating rate of domestic joint-alkali enterprises is near 80%.

 

If you have any questions, please feel free to contact SunSirs with marketing@sunsirs.com.

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