Price trend

In the first half of 2023, the domestic liquid ammonia market experienced a significant decline. According to the Commodity Market Analysis System of SunSirs, the drop in liquid ammonia for the first half of the year exceeded 42%. The price in Shandong, the main production area, dropped from 4,700 RMB/ton at the beginning of the year to 2,700 RMB/ton on June 30. The price had almost halved. The main reason was the decline in coal and natural gas prices on the cost side, as well as the rapid decline in prices due to the imbalance between supply and demand.

Let's take a specific look at the trend of each stage:

January coincided with a holiday, with limited logistics and transportation, as well as the impact of rainy and snowy weather. Coupled with the recovery of supply from northern ammonia enterprises, the market mainly focused on reducing prices to reduce inventory. The market for liquid ammonia started to decline. The highest price dropped from nearly 4,700 RMB/ton at the beginning of the year to nearly 4,100 RMB/ton at the end of January.

After mid February, the price of liquid ammonia began to rise, mainly because after the end of the Spring Festival, businesses entered the market, and downstream stores were mostly replenished after the holiday. During this period, unexpected centralized maintenance support was provided for enterprise equipment, and downstream spring cultivation began to stock up. The favorable supply and demand drove the ammonia market up. The market continued until mid to late March. The price rebounded from the bottom to around 4,500 RMB/ton, without breaking the high point at the beginning of the year.

After April, the supply and demand bearish situation overlapped, and the decline of liquid ammonia accelerated. A large number of early maintenance devices resumed work, and domestic manufacturers concentrated on reducing the outlet price of liquid ammonia in turns to reduce inventory pressure. The monthly decline of enterprises generally exceeded a thousand RMB/ton. In addition, imported goods impacted the domestic market, and a large amount of overseas liquid ammonia had arrived at the port, resulting in a significant oversupply of domestic supply. The superimposed demand entered the agricultural window period, and the agricultural demand became weak, while the industrial demand failed to follow up in time. Liquid ammonia reached a new low in the past two years in late June. The weak market continued until the end of June.

Market outlook

Liquid ammonia analysts from SunSirs believe that the current price of liquid ammonia has reached a bottom, and the market has a willingness to rebound and repair. And since early July, ammonia prices have stabilized and stopped falling. There are signs of a rebound in prices this week. With the strengthening of maintenance efforts by manufacturers, the supply-demand contradiction has significantly eased, and the trend of tight supply will maintain a mild upward trend in ammonia prices in the short term. However, in the middle of the second half of the year, it may still be difficult for liquid ammonia to overcome its weak situation. On the one hand, there is heavy cost pressure, and it is difficult for coal and liquefied gas prices to perform well. In addition, there is also a situation of overcapacity on the supply and demand side. Liquid ammonia may experience price fluctuations during brief periods due to regional supply imbalances. The overall trend may maintain a weak and volatile pattern.

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