SunSirs: Ammonium Sulfate: Tight Supply Drives Prices Higher

Recently, driven by external factors and rising raw material costs, the domestic ammonium sulfate market has continued to climb. According to SunSirs price monitoring data, in the first week of March, the price of ammonium sulfate rose from 1,240 yuan (per ton, same below) to 1,368 yuan, an increase of 10.32%, reaching a new high for the year. As of March 15, some manufacturers have adjusted their ex-factory prices to 1,600 yuan for agricultural-grade ammonium sulfate and 1,420 yuan for power plant-grade ammonium sulfate.

Industry insiders point out that the essential demand for ammonium sulfate during the spring planting season is significantly weaker than that for urea, and there are no new highlights in industrial demand. However, the recent price increase has been notably stronger than that of urea. This is primarily due to current international tensions, with the escalation of the situation in the Middle East triggering price hikes for basic raw materials such as sulfur. Coupled with a global shortage of nitrogen fertilizers, export quotes for ammonium sulfate have surged in the short term, thereby driving domestic prices to soar.

External Disruptions and Price Transmission

A product manager at Huaru Hengsheng Fertilizer Sales Company explained that following the Spring Festival, the market entered a critical window for spring plowing and fertilizer preparation. Under the interplay of four factors—the release of essential demand, high costs, government policies to ensure supply, and capital market dynamics—the fertilizer market overall exhibited a pattern of initially strong then stable performance, with high-level fluctuations and more price increases than decreases. In the final week of February, mainstream nitrogen fertilizers such as ammonium sulfate, urea, and ammonium bicarbonate remained stable, with prices rising by 2.24%.

“However, after entering March, ammonium sulfate prices surged sharply. The primary cause was the tightening of global nitrogen fertilizer supply triggered by tensions in the Middle East, compounded by some customers switching to ammonium sulfate as a nitrogen substitute following the skyrocketing international urea prices,” "He noted that the sudden escalation of tensions in the Middle East on February 28 dealt a massive blow to the global energy and chemical markets. The suspension of exports from Iran, a major urea exporter, triggered a shortage in the international fertilizer market, while ammonium sulfate—as a viable substitute for urea’s nitrogen content—indirectly drove up prices during the same period.

“Unlike urea, where domestic supply and price stability must be balanced, ammonium sulfate prices are directly linked to the international market.” Currently, the urea and ammonium sulfate markets are diverging. Urea prices remain stable but face slight downward pressure due to high operating rates, slowing domestic demand, and export quota policies; in contrast, ammonium sulfate prices continue to rise as global supply tightens and substitute demand surges due to rising international urea prices. This is compounded by relaxed export policies and concentrated shipments at ports, exacerbating short-term supply-demand imbalances.

Rising Costs Drive Up Prices

Ammonium sulfate production primarily involves multiple process routes, including by-products from caprolactam production, coke oven flue gas purification, and flue gas desulfurization (FGD) from boilers. Among these, caprolactam-grade ammonium sulfate accounts for over 40% of domestic supply; it is of higher quality and commands the highest price. Since this process relies on externally sourced sulfur and pure benzene, it is highly sensitive to fluctuations in raw material costs. Recently, escalating geopolitical risks in the Middle East have driven up prices for crude oil, pure benzene, sulfur, and other raw materials, causing production costs to rise.

Amid the ongoing escalation of geopolitical conflicts, sulfur prices have risen significantly since the Spring Festival. As of the close on March 3, sulfur prices in the Yangtze River region had climbed to 4,400 yuan. Meanwhile, most caprolactam-grade ammonium sulfate plants produce the product as a by-product of sulfuric acid manufacturing using purchased sulfur. Taking the Shandong market as an example, the price of 98% sulfuric acid stands at 1,305 yuan, while synthetic ammonia costs 2,099 yuan, resulting in a production cost of 1,538 yuan for caprolactam-grade ammonium sulfate. Although prices for this product have surged recently, they remain below the break-even point when compared to the cost of the raw materials.

In early March, export-oriented traders and granulation plants showed strong purchasing enthusiasm. Currently, some regions are still affected by environmental regulations, leading to production cuts and restrictions at coke plants. Additionally, caprolactam facilities are operating at reduced capacity in response to the industry’s “anti-overcapacity” initiative. These factors have caused a temporary tightening of ammonium sulfate supply, which has also provided support for prices.

Export-Driven Supply-Demand Mismatch

During the 14th Five-Year Plan period (2021–2025), China’s ammonium sulfate exports are projected to grow from 10.65 million tons to 21.36 million tons, representing a compound annual growth rate (CAGR) of 19%, maintaining its position as the world’s top exporter. By 2025, exports are expected to surpass the 20-million-ton mark, marking a 25% increase. Currently, ammonium sulfate exports account for over 80% of the country’s total production, making it one of the few fertilizer categories not subject to export restrictions. Over the past week, driven by surging international demand and port congestion, a concentrated surge in export orders is expected, prompting granulation plants to actively stockpile inventory. This, combined with some ammonium sulfate plants adjusting production plans due to tight sulfur supply and rising costs, has exacerbated short-term supply-demand imbalances.

In stark contrast to the active export market, domestic demand remains weak. Compound fertilizer manufacturers are largely adopting a wait-and-see attitude toward ammonium sulfate procurement, restocking only as needed. Application rates in the agricultural sector are low, and there is a lack of incentive for bulk purchasing. In the short term, export demand remains the primary driver; however, if the international situation eases or shipping costs decline, the risk of price corrections will rise significantly.

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