Recently, domestic ammonium sulfate prices have remained elevated due to reduced production capacity at domestic plants. SunSirs data indicates that on December 12, prices in Shandong remained stable, with caprolactam-grade ammonium sulfate trading at 1,150-1,250 RMB/ton (all prices per ton unless otherwise stated) and coking-grade ammonium sulfate at 950-1,050 RMB/ton. Looking ahead, the market is expected to enter a phase of fluctuating adjustments.

Production Cuts Drive Price Increases

With rapid capacity expansion in ammonium sulfate by-products from caprolactam production, coke oven gas purification, and boiler flue gas desulfurization, total annual capacity is projected to exceed 28 million tons this year. Caprolactam-grade ammonium sulfate, accounting for over 40% of domestic supply, commands relatively higher prices due to its superior quality. Conversely, ammonium sulfate derived from ammonia-containing tail gas contains more impurities and is primarily used in agricultural production, commanding lower prices.

In October this year, caprolactam production incurred losses exceeding CNY1,000 per ton. However, some manufacturers were able to offset these losses through profits from by-product ammonium sulfate, alleviating operational pressures to some extent.

To reverse the industry's “internal competition” and ensure sustainable development, major caprolactam producers implemented multiple production cuts in November to stabilize prices. Data indicates that by December 5, the operating rate of caprolactam-grade ammonium sulfate plants nationwide had dropped to 76.79%, down 8.72 percentage points from early November. Based on an annual production capacity of 12.1 million tons for caprolactam-grade ammonium sulfate, this translates to a daily output reduction of approximately 3,200 tons.

As caprolactam plants implemented capacity reduction measures, caprolactam prices rebounded rapidly, driving up caprolactam-grade ammonium sulfate prices. Enterprises gradually reduced losses and improved profitability. SunSirs data shows the average market price for caprolactam-grade ammonium sulfate reached CNY1,096 on November 26, up 5.79% from the beginning of the month. Subsequently, major manufacturers continued to raise prices, pushing the market average to CNY1,183 on December 5, a 14.19% increase from the previous month.

Beyond caprolactam-grade ammonium sulfate, supply of other by-product grades like coking-grade and cyanuric acid-grade ammonium sulfate also faced stable-to-declining operating rates due to losses in main product margins and production restrictions. Only ammonium phosphate saw a slight increase in new energy-grade supply driven by market gains, though actual expansion capacity remains limited.

Downstream Caution, Weakening Exports

December pricing indicates that despite rising ammonium sulfate prices, downstream buyers remain cautious, leading to a short-term equilibrium in supply-demand negotiations.

The primary drivers of domestic ammonium sulfate price increases are production restrictions tightening supply expectations and exporters' need to replenish inventory gaps. However, weak terminal market feedback is creating significant sales pressure on the domestic market, dampening downstream enthusiasm for raw material procurement.

As the only fertilizer product exempt from mandatory inspection in China, domestic ammonium sulfate exports have steadily increased in recent years, now accounting for over half of total production capacity. Customs statistics reveal that China's ammonium sulfate exports surpassed 16 million tons in 2024, marking a 20% year-on-year increase and setting a new historical record, with Brazil as the largest export destination. This growth momentum is expected to continue into 2025.

Fujian, a major producer and exporter of ammonium sulfate in China, recorded export revenues of CNY3.908 billion in the first three quarters of this year, a 58.79% year-on-year increase, ranking first nationwide. However, the fourth quarter marks the off-season for international demand. Following price increases in the domestic market, ammonium sulfate lacks strong support from end-users, with transactions primarily consisting of small international orders and essential industrial and agricultural purchases domestically. Furthermore, an announcement by Mexico's Ministry of Economy in late November revealed a preliminary ruling to impose a provisional anti-dumping duty of $0.1807 per kilogram on ammonium sulfate originating from China. This measure has negatively impacted China's ammonium sulfate exports.

Market Tug-of-War Leads to Volatile Decline

Regarding future price trends, the fourth quarter's international demand slump coincides with domestic raw material producers maintaining firm pricing, creating a tug-of-war between upstream and downstream players. With sulfur and nitric acid prices continuing to rise, caprolactam-grade ammonium sulfate benefits from dual support of cost and supply. Consequently, the domestic market is expected to consolidate weakly in the short term.

Ammonium sulfate pricing is influenced by multiple factors including supply-demand dynamics, export demand, and urea price linkage. With current weak international end-demand, even amid tight domestic supply, prices lacking demand support are likely to consolidate at elevated levels before gradually declining. Recently impacted by falling urea prices, some major Shandong ammonium sulfate producers reduced quotations by CNY30 on December 14.

SunSirs' ammonium sulfate analyst indicates the market will remain in a stalemate with fluctuations in the short term. On the supply side, caprolactam plants remain unprofitable, with potential for further production cuts, while coking plants continue production restrictions due to environmental policies. On the demand side, domestic compound fertilizer, rare earth, and industrial sectors maintain stable demand.

As an integrated internet platform providing benchmark prices, on December 24th, the benchmark price of ammonium sulfate, according to SunSirs, was 1086.67 RMB/ton, a decrease of 3.55% compared to the beginning of the month (1126.67 RMB/ton).

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