In March, the domestic ammonia market reversed the previous month’s upward trend, with most regions of the country showing a downward trend. The main production areas such as Shandong, Hebei, Shanxi, and Lianghu have experienced significant declines. According to monitoring by Business Society, as of the end of the month, the drop in liquid ammonia in Shandong region was 8.88%. The main supply performance is tolerant, and the pressure of accumulated inventory by enterprises forces prices to continuously decrease; The combination of agricultural demand gaps and negative periods has led to a continuous decline in prices due to the imbalance between supply and demand in the market. At the end of the month, the mainstream price of liquid ammonia in Shandong region was between 3850-4000 yuan/ton.
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From a supply perspective, the overall operating rate of domestic manufacturers is higher than last month, especially in the northern region where the equipment is operating normally. Large factories have accumulated inventory to guide manufacturers to continuously lower their listing prices. According to the monitoring of Business Society, the monthly reduction rate of manufacturers in Shandong region is within the range of 300 yuan/ton. Many devices in the southern region have gradually resumed production, and the increase in supply has further exacerbated the contradiction between supply and demand in the market.
On the demand side, the ammonia market in March reversed the supply shortage situation of the previous month. On the one hand, agricultural demand weakened, and on the other hand, industrial demand could not follow up in a timely manner, especially in the middle and late stages, with liquid ammonia prices gradually falling from their high points. From the perspective of downstream urea, according to the monitoring of Business Society, the trend of urea is weak, mainly fluctuating downward, with a monthly decline of 1.61%. Due to the retreat of agricultural demand, the peak season of returning to green manure has ended, and the procurement volume of composite fertilizers and board markets has declined. In addition, sectors such as ammonium chloride (-3.32%) and melamine (-4.23%) also experienced varying degrees of decline. The weakening of downstream demand support is an important reason for the decline of liquid ammonia.
From the perspective of the industrial chain, the cost side also remains bearish. In particular, liquefied natural gas has plummeted significantly, with a monthly decline of 28.02%. The significant decline in natural gas has had a significant impact on ammonia companies in Southwest China, providing ammonia companies with the possibility of selling at reduced prices despite generally light market trading. The coal market maintains a weak range and adjusts, with prices hovering at relatively low levels. Overall, there is significant bearish pressure on the cost side of the ammonia market.
Future Market Forecast:
Analysts from Business Society believe that from a supply side perspective, ammonia companies had a high output in March, and due to the sluggish urea industry, there were relatively few urea conversion plants. This leads to a significantly weaker market for liquid ammonia compared to urea. The short-term demand side still faces pressure, with agricultural demand lagging behind and industrial demand lagging behind. Therefore, supply and demand are still weak in the near future. Combined with the negative impact brought by the downward trend of upstream raw material natural gas and weak coal, it is expected that liquid ammonia will maintain a weak and volatile pattern in the short term.
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