Price trend

Last week (August 4-8), the liquid ammonia market in Shandong Province was sluggish, with prices declining, defying the previous week's decline. According to the SunSirs’ Commodity Market Analysis System, prices in Shandong, the main producing region, fell 3.51% last week. This was primarily due to increased supply pressure, the gradual resumption of maintenance-related equipment, and weak local demand, which led to a buildup of inventory in the market. As of August 8, the mainstream quote in Shandong was between 2,400 and 2,500 RMB/ton.

Analysis review

First, on the supply side, maintenance facilities in major northern production areas were operating, easing supply. This, coupled with increased urea-to-ammonia conversion by manufacturers, had significantly increased supply. This higher ammonia volume had weighed on ammonia prices. Manufacturers saw significant price easing from the beginning of the week to mid-week, but as the weekend approached, companies' willingness to maintain prices strengthened, leading some major manufacturers to offer small price increases, though the increases were very limited. By Friday, major manufacturers in Shandong Province had generally reduced prices by more than 100-200 RMB/ton. Distributors were primarily under-quoting shipments.

Secondly, on the demand side, compound fertilizer production capacity utilization was low. Maintenance at some downstream facilities in Shandong, Jiangsu, and Anhui led to lower operating rates and ammonia usage. Downstream purchasing activity was low, agricultural demand was still in the off-season, and industrial demand remained rigid, resulting in a bearish outlook on the demand side.

Future outlook:

Market demand was relatively weak recently, primarily driven by agricultural and industrial demand. Future supply fluctuations will be minimal, with some plants operating and others shutting down, but the overall trend is towards a slow increase. On the demand side, compound fertilizer production will be low in the short term, but utilization rates are expected to rebound. In the future, increased supply and rebounding demand will continue to influence prices, which will remain in a volatile range.

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