In February, the international synthetic ammonia market operated regionally, with overall supply relatively tight and prices continuing to fluctuate at a high level, which provided certain positive support for domestic market exports. However, the domestic market saw an obvious imbalance between supply and demand, and a small amount of exports had limited impact on the overall domestic market. The domestic market was still dominated by low-level fluctuations and regional differentiation. Moreover, as international ammonia plants that had undergone maintenance resumed production one after another, international ammonia prices declined month-on-month. Major quotations such as FOB Middle East and CFR Southeast Asia all fell compared with January, weakening the price advantage of China's synthetic ammonia exports and leading to a start of decrease in export volume.

However, on February 28, Israel announced a military attack on Iran. The international supply of synthetic ammonia is expected to tighten again, which may once again provide short-term positive impetus to China's synthetic ammonia export market. Iran is a core exporter of synthetic ammonia and urea globally, relying almost entirely on natural gas for ammonia production. It transports these products via sea through the Strait of Hormuz to major agricultural and industrial regions worldwide, with the core shipping areas concentrated in Asia, Africa, South America, etc. If the conflict affects Iran's energy facilities, it will directly lead to production cuts and shutdowns of gas-based ammonia plants, resulting in significant supply gaps in its main export destinations. The export regions of the Middle East, South Asia, and Southeast Asia overlap with China's export markets, which will further widen the price gap between domestic and foreign markets and create opportunities for China's synthetic ammonia export market.

March is the critical period for spring plowing and fertilizer preparation. The demand for international fertilizers and synthetic ammonia remains strong. Driven by the combined effects of supply contraction and demand support, international ammonia prices are expected to rise again. The further opening of the export market will alleviate the pressure on the domestic market to a certain extent. However, the domestic synthetic ammonia industry is still in an overall situation of overcapacity, with weak downstream demand on the whole, and there has been no substantial improvement in the industry's fundamentals. Going forward, we need to focus on the duration of the conflict, the operation of Iranian facilities, Middle East shipping logistics, and international price trends. If the conflict eases quickly and supply resumes, the support for exports will weaken accordingly; if the conflict continues to escalate, the arbitrage space for China's synthetic ammonia exports will further expand, which will bring sustained benefits to the export market in March and even the second quarter, and drive the sluggish domestic market to a certain extent.

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