Price trend

In October, the domestic liquid ammonia market did not continue the downward trend of the previous two months. The market gradually stabilized, experiencing an initial decline followed by a rise, with prices returning to near-month levels by the end of the month. According to the SunSirs commodity market analysis system, liquid ammonia prices in Shandong province fell by 0.44% in October. By the end of the month, the mainstream price of liquid ammonia in Shandong was between 2,200-2,270 RMB/ton.

The production schedule of the device was not reduced, and the market inventory was still high

From the supply side, the supply and demand structure remained biased towards oversupply. Entering October, the operating rate remained at a medium-high level, with few plants undergoing maintenance and output not decreasing. Enterprises faced high inventory pressure, and to alleviate this pressure, factory prices mostly fell rather than rose. Secondly, external supply sources impacted the market, with imports increasing and low-priced foreign goods flooding the domestic market. The supply situation remained oversupplied. Although some plants experienced temporary outages and reduced production after mid-October, leading to a slight rebound in prices, this upward trend did not continue until the end of the month when some plants resumed operation. Prices from some Shandong manufacturers saw a slight correction, and the market remained weak. Overall, ammonia prices did not change significantly during the month, with the adjustment range continuing to narrow. On the demand side, the peak season for agricultural demand was not as strong as expected, with insufficient support from downstream industries such as urea and compound fertilizers. Industrial demand remained at a basic level with little fluctuation. Weak downstream demand made it difficult for the market to improve.

The industrial chain was cooling down, with weakness mainly in both upstream and downstream sectors

Data from SunSirs shows that upstream natural gas prices rose significantly, while the monthly decline was 12.82%, putting more cost pressure on gas-based ammonia producers. Downstream sectors, in particular, remained generally sluggish, with more declines than increases. Urea, in particular, remained lukewarm, with a 0.85% decline in October, according to monitoring. This was mainly reflected in weak downstream demand, the off-season for agriculture, and the current lower-than-expected increase in compound fertilizer production. Industrial demand also showed a downward trend in end-user production. The market was generally driven by immediate needs, and this demand-side constraint was preventing the ammonia market from recovering from its slump.

Market outlook

According to analysts at SunSirs, from the supply side, the future market supply and demand pattern is not expected to change significantly, with the market leaning towards a supply-demand balance. Some plants will be operating while others will be shut down, thus mitigating their impact. Companies may maintain a price-supporting stance, potentially limiting further price declines. Supply and demand pressures are expected to continue to ease in November.

From the demand side, demand is expected to remain stable in the short term, but the outlook may be weak in the later period. On the one hand, the peak season for agricultural use is characterized by dispersed centralized procurement, resulting in a lack of speculative sentiment in the market and sluggish trading. On the other hand, industrial demand remains mainly based on essential needs. Overall, downstream demand for liquid ammonia may continue to drag down its price recovery in the later period.

Taking all factors into account, liquid ammonia prices are expected to remain range-bound in the short term, remaining at low levels. Given the ongoing supply and demand dynamics, liquid ammonia prices may struggle to break free from this weak and volatile pattern. Future developments will depend on updates regarding plant operating rates.

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