Concentrated Nitric Acid Market Performed Well in 2017

Introduction: The Chinese concentrated nitric acid market performed well in 2017 and producers’ profits were satisfactory. At the beginning of November, the price hit a five year high. The supply-side reform saw obvious results. In Q1 and Q4, the profits boomed. The co-movement among related products strengthened. In 2018, the concentrated nitric acid market will keep the good trend.

From January to October, the average price of China’s concentrated nitric acid was in the range of RMB 1,318-1,879/mt. In Q1, 2017, dealing prices moved up RMB 100-200/mt. The major reason was that many units were shut and the overall supply was tight. After China’s National Day holiday, prices of Ammonia synthesis jumped. Producers suffered high production cost. Moreover, the downstream industries’ profits were very high. Nitric acid market skyrocketed. Up to mid-November, the market prices increased by RMB 595-665/mt. In mid-November, the mainstream negotiation price was RMB 1,867/mt, up 54.30% from the same period of 2016. Seen from the chart above, the price trend of concentrated nitric acid can be divided into four stages. 

Moved Upwards during Jan-Mar: Though China’s New Year was in this period, the festival influence on the concentrated nitric acid market was limited. In January and February, the production cost was high and a large number of units were shut. Moreover, the demand from downstream users was modest. In March, the spring ploughing began. The demand for dilute nitric acid increased. Prices of concentrated nitric acid increased by RMB 100-200/mt. The mainstream negotiation prices were around RMB 1,426/mt, up 40.49% from RMB 1,015/mt in 2016.

Rapid decline in Q2, 2017: With the increases in profits, units that underwent maintenance previously restarted gradually. The supply was increasing. Moreover, many aniline units were shut. Nitric acid prices started to fall. In May, the purchasing prices from large-sized users in North China slumped, which weighed on the market in South China. The price spread in North China and South China shrank. At the end of the June, the concentrated nitric acid market was still poor. The mainstream negotiation price was around RMB 1,383/mt, down 3.02% from last quarter.

Fluctuated at lows from July to H1 September: In July, concentrated nitric acid units ran normally. The supply was ample. Furthermore, the downstream demand remained weak. In early August, the aniline unit at Shandong Jinling Chemical was shut, and the demand for concentrated nitric acid declined greatly. Producers’ profits became negative. The wait-and-see sentiments got stronger. The average negotiation price was RMB 1,334/mt, down 3.54% from last quarter.   

Skyrocketed from mid-Sept to mid-Nov: Restricted by the production cost, the operating rate in concentrated nitric acid industry was influenced. Moreover, the nitric acid unit in Yantai Juli was shut. The purchasing volume of concentrated nitric acid increased. Then the BRICS summit influenced the transportation, nitric acid prices increased RMB 100-120/mt. After the National Day holiday, Liquid ammonia prices increased greatly, the production cost of nitric acid moved up. Furthermore, the profits in aniline and TDI industries were large. Prices of concentrated nitric acid increased RMB 595-665/mt in one month. The average negotiation price was around RMB 1,593/mt, up 19.42% from last quarter.

The Chinese concentrated nitric acid market moved up in 2017. The profits of producers in Shandong increased. In H1, 2017, the average gross profit was RMB 148/mt, increasing greatly from the same period of 2016. In Q1, 2017, prices of concentrated nitric acid increased greatly, and the operating rate moved up. Prices of concentrate nitric acid slid. Taking the prices in Shandong as the example, the synthesis ammonia prices increased greatly in early 2017, and the prices of concentrated nitric acid moved up pressured by the production cost.

During January to end April, the profits were in the range of RMB 130-300/mt. With the increases in operating rate, the prices began to shrink. The profits shrank. At the end of June, the profits declined to RMB 50-100/mt. In July, the profits slumped and some producers saw negative profits around RMB 50/mt. Liquid ammonia prices ran at highs but the supply of nitric acid increased. The demand for nitric acid was flat. Producers who have no inner-supply synthesis ammonia operated in a loss. In H2 August, the liquid ammonia prices declined, and some nitric acid units underwent maintenance. The profits increased to RMB 130-150/mt. In September, the supply increased and the prices of liquid ammonia increased. Profits shrank again. The average profit was in the range of RMB 20-30/mt.

After the National Day, the concentrated nitric acid market boomed, and prices increased RMB 600-700/mt. The profits jumped. In Anhui and Jiangsu, the prices of concentrated nitric acid increased to RMB 2,100-2,200/mt. Prices in Shandong increased to RMB 1,900-2,000/mt. The profits increased to RMB 500-600/mt. However, in December, the demand for nitric acid moved down. Prices and profits of concentrated nitric acid may slide.