Concentrated Nitric Acid Market Moved Well

Introduction: In early 2018, the Chinese concentrated nitric acid market fluctuated at high levels. The profits remained high. With the coming Spring Festival, the downstream demand slowed down and nitric acid producers’ inventory was increasing. However, the prices still remained stable.   

In H1 January, the prices of concentrated Nitric Acid showed a stable-to-increasing trend supported by the raw materials. In North China, purchasing activities from Shandong Jinling, Shandong Jinmao and Cangzhou Dahua were stable. Producers had no sales pressure. Moreover, the dilute Nitric Acid market was also fine. In South China, units restarted slowly, but the supply didn’t see obvious increases. Moreover, the downstream demand was modest. Players raised prices on the increasing prices of raw materials. The, some downstream users shut down their units and the demand for concentrated nitric acid became weak. Producers’ inventory increased and prices slid. Up to January 24, mainstream negotiation prices for 98% nitric acid were RMB 1,721/mt or so, increasing 23.28% from the same period of 2017. Taking the Shandong market as the example, the profits for concentrated nitric acid producers without inner supply of synthesis Ammonia were in the range of RMB 130-200/mt. Concentrated nitric acid prices in Shandong, Anhui, Henan, Jiangsu and Zhejiang moved stably. With the coming Spring Festival, the operating rate had become the market focus.

According to ECHEMI’s data, up to H2 January 2018, the total capacity of Chinese concentrated nitric acid in China was 4,435kt/a and the effective capacity was 3,860kt/a. The monthly operating rate was 58.35%, up 4.35% month on month and jumping 11.35% year on year.

ECHEMI monitored 30 concentrated nitric acid producers, and around 10 producers shut down their units. The total capacity was 865kt/a, occupying 22.41% of the total. Around 425kt/a capacity was shut for a year.

In January 2018, the number of shut units declined as the profits in the Chinese concentrated nitric acid market was fairish. Furthermore, producers wanted to take back all the funds. In February, some unit will be shut and the overall operating rate will be 50%.

The Chinese concentrated nitric acid market in 2018 performed similarly with the trend in 2017. Synthesis ammonia market influenced the concentrated acid market greatly. With the supply-side reform, the concentrated nitric acid moved more stably. With the changes in farmers’ habits and the oversupply of chemical fertilizer, the stock interest in winter has become thin, which cannot support the synthesis ammonia market. But the coal prices supported the synthesis ammonia strongly. Given the high profits, the operating rate moved up, and the supply increased. In February, the demand will be thin and some producers will reduce the prices. Prices for concentrated nitric acid will be in the range of RMB 1,700-1,800/mt. In March, the demand will increase. It is predicted that the mainstream offers for concentrated nitric acid will be in the range of RMB 1,600-1,800/mt.