SunSirs: With Both Supply and Demand Weak, Liquid Ammonia Plunged Over 16% Last Week

Price trend

Last week (May 11–15), the domestic liquid ammonia market continued to exhibit a weak supply-demand dynamic, with prices accelerating their downward trend. Quoted prices in major production regions were generally lowered; market performance remained sluggish, and downstream buyers primarily adopted a wait-and-see stance while purchasing strictly on an as-needed basis. According to the SunSirs Commodity Analysis System, as of May 15, the mainstream ex-factory price in Shandong stood at 2,150–2,350 RMB/ton, marking a weekly decline of 16.69% for liquid ammonia.

Market analysis

Supply Side: Limited Impact from Maintenance; Supply Remained Ample

Last week, the operating rate for liquid ammonia remained at a high level; domestic ammonia output continued to rise rather than fall, with operating rates hovering near 90%. On one hand, fewer facilities underwent maintenance, and some units postponed their scheduled shutdowns. On the other hand, a significant number of facilities entered their production resumption phase. Market supply proved abundant, and inventories at manufacturing plants accumulated to high levels. Under mounting pressure, major producers repeatedly lowered their prices; manufacturers in the Shandong region, in particular, generally cut prices three to four times during the week, with price reductions ranging from 200 to 400 RMB/ton.

Demand Side: Agricultural and Industrial Demand Both Sluggish; Exports Remained Weak

The peak season for spring plowing in the North was essentially drawing to a close, while fertilizer demand in the South was temporarily characterized primarily by "buy-on-demand" purchasing; consequently, agricultural demand has entered its off-season. Operating rates for phosphate fertilizers have dropped below 50%, causing ammonia prices to lose their underlying support. Downstream products—such as urea—have experienced varying degrees of decline, with urea prices falling by 2.28% last week. Industrial demand also lacks bright spots; operating rates among downstream sectors for caprolactam and acrylonitrile have failed to show improvement, and with downstream buyers largely adhering to a buy-on-demand strategy, there were no discernible growth drivers for demand.

Furthermore, on the export front, order volumes remain lackluster. With international ammonia prices trending downward, the price spread relative to domestic ammonia has narrowed further, resulting in diminished profit margins for export orders. This situation has exerted a certain degree of pressure on the domestic ammonia market.

Market Outlook

According to analysts at SunSirs specializing in liquid ammonia, the domestic ammonia market is likely to remain sluggish in the short term. Given the current abundance of ammonia supply and high inventory levels, the possibility that manufacturers still have some room to lower prices cannot be ruled out. However, this outlook should be viewed with caution; scheduled plant maintenance in regions such as the Northwest—expected to take place in the middle to latter half of the month—is poised to alleviate supply pressures. Furthermore, with operating rates among downstream phosphate fertilizer producers expected to rise, the ammonia market may gradually halt its decline and is likely to experience a market correction toward the end of the month.

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