SunSirs: Liquid Ammonia Prices Rose Significantly, but May Pull Back As Production Units Resume Operations

Market Overview

Last week, the domestic liquid ammonia spot market trended upward amidst fluctuations, maintaining overall strength. Manufacturers in key production regions successively raised ex-factory quotes, leading to a notable rise in price levels. Regional supply disparities intensified—with gains in the north outpacing those in the south—and market trading activity picked up.

As of August 28, the benchmark price for liquid ammonia tracked by SunSirs stood at 2,666.67 RMB/ton, having surged by 5.68% over the previous week. In Shandong, mainstream ex-factory quotes settled via bank acceptance draft ranged from 2,800 to 2,900 RMB/ton, with cash prices 50 RMB/ton lower; mainstream transaction prices in Hebei ranged from 2,520 to 2,580 RMB/ton; and prices in Central and Northwest China were raised in tandem, leading to a widening of regional price differentials.

Supply side: Maintenance disruptions tightened supply.

Summer maintenance shutdowns continue to take effect: Hebei Zhengyuan’s 600,000-ton synthetic ammonia unit is undergoing maintenance this week, with sales relying solely on existing inventory. Meanwhile, enterprises in Shandong, Shanxi, and the Northwest have reduced operating loads, leading to a drop in the total volume of merchant ammonia available for the market; many facilities are prioritizing internal urea production, thereby tightening external supplies—a factor that has become the primary driver behind the current round of price increases.

Limited offsetting effect from partial resumption: Shandong Shuntian restarted its 100,000-tonne liquid ammonia unit last week, but the incremental output was insufficient to offset the volume loss caused by maintenance, leaving the overall supply in a state of tight balance.

Support from favorable export data: In July, synthetic ammonia exports surged by 78.34% month-on-month, while imports dropped by nearly 50%; the increased outflow of domestic product to overseas markets indirectly tightened domestic spot supply, bolstering manufacturers' confidence in maintaining price levels. Solid support from feedstock costs: Anthracite prices remain high, providing strong cost-side support for synthetic ammonia production and reducing producers' willingness to lower prices to move inventory.

Demand Side: Supported by Essential Needs, but Lacking Incremental Growth

Agricultural Urea (Downstream): The domestic market remains in the off-season for agricultural demand, and urea spot prices are fluctuating within a narrow range. According to the SunSirs commodity analysis system, urea prices fell by 0.3% last week; factories are purchasing liquid ammonia based on immediate needs rather than engaging in large-scale restocking. Consequently, incremental demand from the fertilizer sector is limited, providing little upward momentum for ammonia prices.

Industrial demand is recovering steadily: Operating rates remain stable among manufacturers of compound fertilizers, soda ash, caprolactam, and denitrification chemicals. Following a round of restocking during the earlier period of low prices, downstream buyers have become more cautious as liquid ammonia prices rise; most are purchasing on an as-needed basis and show little inclination to chase rising prices.

Trade and distribution: Stocks of low-priced goods held by intermediaries are gradually being depleted, and overall inventory levels remain low to moderate. As prices continue to climb, a wait-and-see attitude is growing among some traders, leading to a reduction in stockpiling activity.

Inventory Status

Nationwide, liquid ammonia inventories at production enterprises remain at generally low-to-moderate levels; plants in regions undergoing maintenance are seeing rapid inventory depletion with no significant pressure from stockpiling, providing support for spot prices. Distributors are generally reluctant to hoard large quantities, resulting in limited growth in commercial inventories.

Market Outlook

The liquid ammonia market is likely to experience fluctuations with an upward bias in the short term. As units undergoing maintenance have not yet fully resumed production, tight supply persists and manufacturers remain keen to support prices; however, the lack of sustained, significant follow-through in downstream demand limits the scope for a continued sharp rise. Looking ahead, as maintenance-affected plants gradually restart and additional supply enters the market, there is potential for a periodic price correction.

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