Under The Trend of Tight Supply And Demand Balance, The Domestic Liquid Ammonia Market Stabilizes at A High Level

After the holiday, the domestic liquid ammonia market stabilized, and the market fluctuated little. In northern regions such as Shandong and Hebei, prices rose slightly, mainly due to supply reductions in the region and some equipment failures affecting supply. According to the monitoring of the business agency, as of April 8, the weekly increase of liquid ammonia in Shandong area was 0.34%. At present, the mainstream quotation range of liquid ammonia in Shandong area is 4700-4900 CNY/ton.

Supply Side

On the supply side, this week, the overall ammonia release in many places in China was mainly flat compared with last week, with a partial decline. Especially in the southern region, there are too many equipment maintenance, and the supply reduction has caused the price of liquid ammonia to climb above the 5,000 yuan mark. In northern regions such as Shandong, affected by the public health event, shipments were not smooth, but at the same time, the equipment was shut down for maintenance. A set of installations in Shuntian and Zhengyuan eased the supply pressure, and the ammonia price in the region was mainly supported and stabilized. 

Cost Side

The upstream coal market is affected by the control policy, and the price remains at the previous level. At present, the profits of downstream methanol and liquid ammonia manufacturers have generally been boosted. And along with the fall in natural gas prices, the pressure on the cost of gas companies has been eased. According to the monitoring of the business agency, LNG fell by 2.14% this week.

Demand Side

From the terminal point of view, the downstream of liquid ammonia still maintains a moderate growth trend, the price of urea has slightly adjusted, and products such as ammonium chloride have rebounded. In general, the downstream agricultural demand is still strong, and the industrial demand is normal. Spring ploughing is approaching, and domestic fertilizer use is entering the peak season. Distributors are active in picking up goods. However, due to the epidemic, the delivery of urea has been blocked, and the freight has risen sharply. Compound fertilizer plants, sheet metal plants, and melamine plants have relatively high operating loads, and follow up on dips.

From the above chart, the price comparison chart of urea and liquid ammonia shows that the trend of liquid ammonia and urea is basically the same, and the curves crossed in April. However, the current spread between the two has narrowed and remains at a reasonable level.

From the picture above, the liquid ammonia industry chain diagram shows that the current profit of the liquid ammonia industry chain continues to improve, the price of natural gas upstream of the gas head has fallen, and the price of coal is affected by the policy, and the price remains weak, which is conducive to alleviating the downstream cost pressure. The middle and lower reaches have recovered, corporate profits have increased, and the profits of liquid ammonia have increased significantly compared with the previous period. The downstream fields also improved significantly, with formic acid, ammonium chloride, and ammonium nitrate all rising to varying degrees.

Market Outlook

The business club believes that, at present, the supply side remains stable as a whole, and the trend of differentiation within the region is obvious. The market is weak in the north and strong in the south, while the demand side remains dominated by rigid demand, and it is unlikely that the demand will be enlarged. However, at the same time, there are maintenance plans in many places, and the supply side also maintains a reasonably tight level, and the future trend of supply and demand will continue to balance. In addition, the public health event is still fermenting, and it will still bring certain pressure on transportation in the later stage. In general, with little supply pressure, the ammonia market may still maintain a high consolidation pattern in the near future.