Price trend

Domestic liquid ammonia prices continued their downward trend from the previous month in September, though the rate of decline slowed significantly, gradually stabilizing. According to the SunSirs Commodity Market Analysis System, liquid ammonia prices in Shandong Province fell by 1.31% in March. By the end of the month, the mainstream price of liquid ammonia in Shandong Province was between 2,150 and 2,300 RMB/ton.

Analysis review

Enterprises increased production schedules and market inventory was high

On the supply side, the supply-demand structure remained in surplus. Operating rates continued to rise in September, as previously under maintenance companies gradually resumed operations, coupled with increased ammonia conversion. This put companies under high inventory pressure, and to alleviate this pressure, factory prices had fallen more than risen. Furthermore, import volume remained under pressure, with low-priced foreign goods impacting the domestic market. Supply remained in a state of surplus. Although manufacturers saw price increases after mid-month due to spot inspections and reduced production schedules, prices gradually returned to a downward trajectory by the end of the month as some units resumed operations. Overall, ammonia prices fell by 50-100 RMB/ton during the month. On the demand side, the peak season was clearly weak, with insufficient support from downstream products such as urea and compound fertilizers. Industrial demand remained rigid, with minimal fluctuations. This downstream weakness further exacerbated the supply-demand imbalance.

The industrial chain was cooling down, with upstream and downstream sectors showing weakness

Looking at the liquid ammonia industry chain, the upstream and downstream markets were weak. Upstream natural gas continued to weaken, with a monthly decline of 2.06%. Downstream sectors in particular remained generally sluggish, with more declines than increases, significant decline, and small gains. Urea, in particular, remains tepid. According to monitoring, urea prices fell as much as 5.05% in September. This waw primarily due to weak downstream demand and the agricultural off-season. The increase in compound fertilizer production was falling short of market expectations. Terminal production in the industrial sector was also showing a downward trend. The market was generally dominated by rigid demand, and this demand side was hindering the ammonia market from recovering from the downturn.

Market outlook

Analysts of SunSirs believe that from the supply side, market pressures will persist, with some plants operating and others shutting down, but the impact will likely be mitigated. Companies may maintain their price support, potentially limiting the potential for further price declines. Furthermore, the potential for ammonia production to increase with the subsequent shift to ammonia production suggests a potential upward trend in ammonia production. Supply and demand pressures in October remain significant.

On the demand side, demand remains stable in the short term, but expectations are for a weaker outlook in the future. This is primarily due to the dispersed nature of peak agricultural procurement, resulting in a lack of market speculation and light trading. Furthermore, industrial demand remains primarily driven by rigid demand. Overall, the downstream sector of liquid ammonia may continue to drag down its price recovery in the future.

Taking all factors into consideration, liquid ammonia prices will likely remain low in the near term. Under the pressure of supply and demand, liquid ammonia prices may still struggle to break free from the weak and volatile pattern. It still needs to pay attention to news on the start of plant operations at manufacturers.

If you have any inquiries or purchasing needs, please feel free to contact SunSirs with support@sunsirs.com.