Ammonium nitrate has just embraced the opportunity, but will it go down again?

On August 4, a big explosion occurred in the port of Beirut, the capital of Lebanon, which once again brought ammonium nitrate to the forefront. On the 5th, the Office of the Security Committee of the State Council and the Emergency Management Department of the State Council held a national video conference on production safety, demanding that the lessons of the major explosion in Beirut be deeply learned and a special inspection and rectification of the storage safety of hazardous chemicals nationwide.

The ammonium nitrate explosion in Tianjin Port five years ago kept the ammonium nitrate market in a downturn. So, what impact will the explosion in Beirut port have on the ammonium nitrate market?

In my country, ammonium nitrate is mainly used for industrial and agricultural purposes. Industrially, it is mainly used as a raw material for industrial explosives in civil explosive equipment, accounting for about 64% of total consumption, and a small amount is used in refrigerants, nitrogen oxide absorbents and chromatography reagents; agriculture is mainly used for fertilizer modification Or compound fertilizer processing, such as calcium ammonium nitrate, nitro compound fertilizer, etc., account for about 30% of the total consumption.

Originally, the novel coronavirus epidemic has brought opportunities to the ammonium nitrate market this year. Due to the increasing downward pressure on the macro economy, infrastructure investment is seen as an important means of stabilizing growth. Various places have issued bonds to raise funds, and launched infrastructure projects such as railways, highways, airports, urban construction, and water conservancy. According to media statistics, 11 provinces and cities including Yunnan, Sichuan, Fujian and other provinces and cities announced 25 trillion yuan in key project investment scale contracts, of which 5.57 trillion yuan is planned to be completed in 2020. The executive meeting of the State Council held on May 6 requested that on the basis of the 1.29 trillion yuan of local government special bonds that had been issued at the beginning of this year, a new quota of 1 trillion yuan of special bonds should be issued ahead of schedule. According to China National Railway Group Co., Ltd., in July, the national railway fixed asset investment was 67.1 billion yuan, a year-on-year increase of 3.6%, of which large and medium-sized infrastructure projects completed investment of 49.9 billion yuan, a year-on-year increase of 11.3%. The expansion of the scale of infrastructure has increased the demand for civilian explosive products and indirectly triggered the demand for ammonium nitrate. In the first July of this year, the national average price of ammonium nitrate increased by about 10% compared with the same period last year.

In agriculture, ammonium nitrate is mainly used to produce nitro fertilizer. Nitro fertilizer is safe and reliable, easy to use, good in environmental performance, high in nutrient content, retains the basic characteristics of ammonium nitrate, contains nutrients required for crop growth such as nitrogen, phosphorus and potassium, has balanced nutrients and high active ingredient content, which satisfies the traditional fertilizer market demand. Because of this, the demand for ammonium nitrate in agriculture has been increasing in recent years.

However, the loud noise in Beirut Port is bound to have a certain negative impact on the domestic ammonium nitrate market outlook. It is expected that the price may fall, but there is not much room for decline. The market price will run in the range of 1,650 to 1,900 CNY/ton.

Specifically, the impact of the explosion accident on ammonium nitrate is mainly reflected in the production, marketing, inventory and export.


Reduced output

In terms of production conditions, as supervision becomes more stringent, some manufacturers, especially old factories that still produce in densely populated areas due to historical reasons, will take the initiative to reduce their production load, and output is expected to decline.


Slowdown in demand growth

From the perspective of demand, the scope of use of ammonium nitrate will be more strictly restricted, especially for agricultural ammonium nitrate, which will be more strictly controlled. In recent years, agricultural ammonium nitrate has been in a stage of rapid growth, but the growth rate may slow down in the future.


Destocking trend is obvious

Judging from the inventory situation, the Beirut Port explosion accident was caused by the inventory of ammonium nitrate, and the explosion accident at the Tianjin Port of China was also caused by the inventory of ammonium nitrate. If ammonium nitrate is stored for too long and poorly ventilated, it will decompose itself to generate heat, which will cause the temperature to rise and burn, or even cause an explosion. In other words, ammonium nitrate does not necessarily explode when it encounters an open flame, and it will explode if it is stored for a long time by heating itself. Spontaneous combustion and explosion are hard to prevent. After the Beirut Port explosion accident, all parts of the country will inevitably clean up ammonium nitrate storage warehouses, reduce warehouse inventory, shorten storage time, and reduce harm. Obviously, a large amount of ammonium nitrate stocks will be sold to the market next, which will impact the ammonium nitrate market and cause prices to fall.


Increased export difficulty

From the perspective of exports, all countries in the world will learn from the Beirut Port explosion accident, clean up and reduce ammonium nitrate stocks, and reduce the demand for ammonium nitrate. my country's customs will also increase export supervision, and the difficulty of exporting ammonium nitrate is expected to increase. According to national customs statistics, in the first half of this year, my country exported 61,200 tons of ammonium nitrate, a year-on-year decrease of 30.4%. It is expected that the export of ammonium nitrate in the second half of the year is even more optimistic.