Price trend

In June, the domestic liquid ammonia market continued its decline in May, with an increase in the decline compared to the previous month. According to the monitoring of the Commodity Market Analysis System of SunSirs, on June 29th, the cumulative decline in the main production area of Shandong this month was 10%. Manufacturers in the Shandong region cumulatively lowered prices by around 300 RMB/ton this month.

Analysis review

On the raw material side, according to the monthly rise and fall chart of the liquid ammonia industry chain of SunSirs, the industry chain showed a pattern of more decline, less rise, and downstream and midstream being weaker. Upstream natural gas prices had risen. However, the boosting effect on downstream liquid ammonia was limited. On the one hand, coal fired ammonia enterprises were still affected by the low coal prices, and their profits were still acceptable. In order to ensure the shipment of goods, enterprises still had the willingness to lower prices to attract the market. According to the Commodity Market Analysis System of SunSirs, the decline in thermal coal this month was 1%. Overall, there was a negative impact on the liquid ammonia market. At the same time, reflecting both supply and demand, the market still performs relatively negative.

On the production side, the inventory pressure of enterprises was high. To alleviate the pressure, factory prices continued to be lowered. On the one hand, supply had increased, manufacturers' shipments had slowed down, and inventory pressure had increased. On the other hand, with a large import volume, low-priced foreign goods were impacting the domestic market. The supply was in a surplus situation.

On the demand side, downstream products such as urea and compound fertilizers lacked sufficient industry support, resulting in a decline in the entire product line. Urea and ammonium chloride had experienced significant declines. According to monitoring, urea was decreased by 5.88% in June, while ammonium chloride decreased by 5.18%. Downstream weakness had further exacerbated the supply-demand contradiction. As of 29th, the mainstream quotation for liquid ammonia in Shandong region was between 2,500-2,700 RMB/ton.

Market outlook

The cost side will not change much, especially the coal price may continue to be weak. In the short term, the downstream urea and compound fertilizer market continues to be weak, while ammonia companies are nearing the end of destocking, and it is expected that supply pressure may ease in the near future. In the later stage, the demand of downstream agriculture will pick up, and the price of material liquid ammonia will stop falling. In the later stage, there may be a gradual upward search for space.

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