In August 2024, the domestic liquid ammonia market fluctuated and rose, with a strong upward trend, continuing the upward trend in July. At the end of the month, there was a brief decline, and the market showed signs of peaking and stabilizing. According to the Commodity Market Analysis System of Shengyi Society, liquid ammonia recorded a growth rate of 10.08% in August. As of the end of the month, the mainstream quotation for liquid ammonia in Shandong is in the range of 2450-2600 yuan/ton.
In the first week of the month, liquid ammonia continued its upward trend from July. The main reason is the tight supply performance in the main production areas of the north, which supports the upward trend of prices. In the northern region, equipment maintenance is relatively concentrated, and in some areas, supply is affected by rainy season weather, resulting in a shortage of supply. As a result, manufacturers have low inventory. In addition, downstream procurement has also recovered, and the ammonia market has significantly rebounded. Manufacturers have raised their prices multiple times, with a cumulative increase of over 300 yuan/ton in the first ten days. Distributors’ offers naturally skyrocketed.
From the second week to mid August, the market experienced a consolidation situation, with prices fluctuating around 2400 yuan. The main reason for the significant changes in the production of urea plants is that there are more conversions of liquid ammonia in the north, especially in Shandong, Hebei and other places, which has led to an upward trend in ammonia production and dragged down the continued rise of liquid ammonia. In addition, manufacturers in Central and East China have also slightly reduced their prices for shipments. The market has shifted from a tight supply to a basic balance between supply and demand.
In the latter half of the year, liquid ammonia surged again, and the overall operating rate of domestic manufacturers significantly declined, especially in the northern main production areas where ammonia discharge decreased by nearly 10% compared to mid month. Multiple sets of equipment in the northern region have malfunctioned or entered seasonal maintenance, resulting in a tight market for ammonia. In addition, multiple sets of equipment have also been repaired in Henan and Anhui provinces. Production enterprises generally experience a shortage of supply and demand for shipments. The ex factory price of liquid ammonia has naturally increased several times. Shandong manufacturers have generally raised prices 2-3 times within the week, with a cumulative increase of over 200 yuan/ton. As of the end of the month, the price of liquid ammonia has slightly stabilized, and downstream purchasing resistance is gradually strengthening, resulting in a slight correction in ammonia prices.
Future forecast
Business analysts believe that from a supply side perspective, the tight market supply has eased with the commencement of some facilities, and the price correction at the end of the month is also based on this. It is expected that the supply will gradually stabilize in the later stage.
From the demand side, there is still some support for agricultural demand, autumn fertilizer preparation is not yet over, and industrial demand remains mainly rigid. From a cost perspective, especially for coal ammonia enterprises, they may still be impacted by the weakness of coal, but the reduction of cost pressure will also provide more profit margins for enterprises.
Taking all factors into consideration, the price of liquid ammonia will gradually stabilize in the near future. In the short term, due to the increase in supply caused by the recovery of equipment, there is room for further price decline. However, considering that demand remains rigid, the possibility of a significant drop in ammonia prices is unlikely.
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