Urea Rises Strongly & Supply Shrinks, Liquid Ammonia Rises to A Record High

The domestic liquid ammonia market continued to push up. Shandong, Hebei, Shanxi and other northern regions have strong increases, ranging from 200-500 CNY/ton. The two lakes areas have also pushed up, the range is around 200 yuan. Too many maintenance devices affect the supply, and superimpose the driving effect of urea. According to the monitoring of the business agency, liquid ammonia rose by 4.03% last week. At present, the mainstream quotation range of liquid ammonia in Shandong is 5150-5350 CNY/ton. The price of liquid ammonia has reached a relative high in history.

supply side

On the supply side, after the holiday, the overall ammonia release in many places in China has dropped significantly compared with before the holiday, and the supply this week is still mainly tight. There are too many devices for maintenance or load reduction in many places in China. Most of them are concentrated in northern areas, such as Shandong Luxi, Hebei Kaiyue, Henan Xinlianxin and Yangmei Plain. In addition, Fufeng liquid ammonia is used for personal use. The superimposed urea market continued to rise, and the magnitude was stronger than that of liquid ammonia, and the number of manufacturers converted to urea increased, and the resonance effect further pushed up the ammonia price.

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. Natural gas prices fell due to factors such as abundant market supply and weaker demand in the off-season. However, the current price remains at a reasonable level, easing the cost pressure of gas-headed companies. According to the monitoring of the business agency, LNG fell by 4.09% this week.

demand side

From the terminal point of view, the downstream demand for liquid ammonia has improved significantly, and both urea and nitrogen fertilizer have risen to varying degrees. This week, the domestic urea market rose strongly. According to the monitoring of the business agency, the weekly increase of urea was 5.63%, and the prices in many places continued to rise, breaking new highs. After the holiday, orders for urea factories increased significantly, manufacturers' inventories continued to decline, and the market was in short supply. The main reason is that the downstream agricultural demand is still strong, and the supply is tight in some parts, and the price continues to rise. Superimposed this week, the urea printing bid was opened, and the export growth expectation also supported the soaring urea price. Downstream fertilizers also saw a significant rise.

According to the price comparison chart of urea and liquid ammonia, the trend of liquid ammonia and urea is basically the same. The curves crossed in late April, mainly because the price of urea continued to rise, and the increase was stronger than that of liquid ammonia.

At present, the profits of the liquid ammonia industry chain continue to improve, and the price of natural gas upstream of the gas head has eased the pressure on the cost side. Coal prices are affected by policies, and prices remain weak, which is conducive to relieving the cost pressure of downstream coal-head enterprises. 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 field is generally improving this week, especially the peak season of agricultural demand in the south has brought an increase to the market.

market outlook

At present, the price of liquid ammonia began to rise weakly in the middle of the week, and the prices of most quotation companies stabilized. As the installations resume work one after another, the tight supply situation may ease. In the later period, transportation will resume, and the heat of the market may decrease. But there is still no sign of turning heads for urea, which will bring strong support to liquid ammonia. Overall, the expectation of increased supply remains the biggest risk factor for high ammonia prices. Markets should be wary of sudden reversals.