SunSirs: Supply Contracted, and the Liquid Ammonia Market Rose Sharply in July

Price trend

Domestic liquid ammonia prices surged in July. According to the SunSirs’ Commodity Market Analysis System, prices in Shandong Province saw a 10.41% monthly increase. This was primarily due to a tight supply situation as many plants underwent maintenance amidst stable downstream demand, resulting in lower operating rates. By the end of the month, the mainstream price of liquid ammonia in Shandong Province was between 2,500 and 2,700 RMB/ton.

Analysis review

On the supply side, market supply remained generally stable in the first half of the month, with liquid ammonia prices fluctuating within a range. Since the latter half of the month, some plants entered maintenance, leading to a decline in supply. However, supply pressure was minimal in Shandong, Hebei, Anhui, and the Hubei and Hunan regions. Companies were raising their quotations repeatedly, with manufacturers increasing prices by over 200 RMB/ton in the last two weeks of the month. This suggested a slightly tight market.

On the demand side, downstream demand showed little improvement. Compound fertilizer production capacity utilization remained low, while demand for urea remained rigid. Urea prices declined throughout July, falling by 0.9%. Regional demand diverged, particularly in Hubei and Hunan regions, where increased demand for phosphate fertilizers led to higher downstream production capacity utilization rates and a slight improvement in agricultural demand. Furthermore, domestic industrial demand continued to strengthen, and ammonia prices remained supported by ammonia plant inventory reductions due to early consumption. Manufacturers showed a clear willingness to maintain prices, which in turn supported ammonia prices.

Market outlook

Analysts at SunSirs believe that the rise in liquid ammonia this month was mainly driven by favorable factors on the supply side. Although there was improvement on the demand side, the increase was not large. It is expected that in August, the maintenance equipment in the north will resume work, and the tight supply may improve, which will dilute the favorable factors of increased compound fertilizer production to a certain extent. Taking all factors into consideration, it is expected that the high price of liquid ammonia will cool down and the price will return and fluctuate in a range.

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