The recent domestic synthetic ammonia market has shown narrow fluctuations and adjustments, but overall it is still in a weak operation situation. Moreover, as the price further touches the bottom, the market's atmosphere of stopping the decline and observing has increased. However, various contradictions are still prominent, and the pressure of goods delivery in the later market is not reduced.

Limited supply-side reductions

Despite the reduction in supply in Shandong, Hebei, Henan, and Shanxi due to production adjustments or plant maintenance, the maintenance period is generally short, and the reduction benefits have not been able to support the market for a long time. The supply in Shandong and Henan has begun to stabilize and increase, and new production capacity is also being orderly promoted. After the market's rapid recovery from the reduction, the supply pressure has not been effectively alleviated. Although some low-priced goods have consolidated after reducing their inventory in the early stage, the overall market supply pressure has once again become prominent.

Demand continues to be sluggish

Seasonal weakness in agricultural demand: The fertilizer market in the fall has progressed slowly and has not fully started, with the production rate of compound fertilizer enterprises only maintained at 3-4成, and the production of phosphatic fertilizers and compound fertilizers continues to decline, and the overall demand release in the agricultural downstream industry chain is slow.

Industrial demand growth is lackluster: Affected by major activities in the north, the operating rate of industries such as acrylonitrile, caprolactam, and nitric acid in surrounding areas has generally declined. Except for the support of essential procurement, the overall demand support is insufficient.

Inventory pressure and price decline

The downstream only maintains essential purchases, and against the backdrop of sluggish demand, the market still faces inventory reduction pressure, even though supply has shrunk. However, in reality, the inventory levels of most synthetic ammonia enterprises are generally high, leading to frequent low prices in the market to smoothly reduce inventory, and some market prices have dropped to around 1750 yuan/ton, setting the lowest price in recent years at the same period.

Overall, the root cause of the long-term weakness in the ammonia market lies in the limited reduction in supply and the continuous weakness in demand, which have not been effectively matched. It is expected that the contradiction between supply and demand in the market will still be prominent in the short term, and more attention should be paid to the further adjustment of supply and demand in the market after major activities in the later period.

As an integrated internet platform providing benchmark prices, On September 3rd, the benchmark price of liquid ammonia by SunSirs was 2,283.33 RMB per ton, remaining the same as at the beginning of this month.

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