Price trend

In November, the domestic ammonia market fluctuated, with the Shandong region rising and falling. According to the Commodity Market Analysis System of SunSirs, as of the 30th, the monthly increase of liquid ammonia in Shandong region was 0.43%, but the amplitude exceeded 10%. As of November 30th, the mainstream price of liquid ammonia in Shandong region was between 3,800-4,000 RMB/ton.

Analysis review

From a supply side perspective, entering November, the market experienced a transition from tight to loose supply. In the first half of the month, the production of equipment decreased and the supply tightened, leading to an increase. Specifically, temporary failures frequently occur in equipment in Shandong region, and multiple sets of equipment were undergoing centralized maintenance. Due to environmental inspections in the Shanxi region, manufacturers had restricted production, increasing the pressure of tight supply in the entire northern region. In the second half of the month, with the resumption of production of some devices, the supply increased, downstream procurement decreased, and combined with the increase in ammonia emissions from large factories. Supply pressure continued to rise, manufacturers lowered prices to ship, and the market followed suit.

On the demand side, downstream demand for liquid ammonia was stable, agricultural demand was growing moderately, and industrial demand was lagging behind. The main downstream products urea, ammonium chloride, and DAP had all seen good growth rates. The maximum increase exceeded 4%. The overall demand was showing a moderate growth trend.

On the cost side, from an upstream perspective, coal prices had fluctuated and natural gas prices had risen significantly. While the cost side provided support, it had also put cost pressure on ammonia enterprises, mainly because the increase in liquid ammonia had not kept up with the increase in natural gas prices.

Market outlook

According to analysts from SunSirs, from a supply side perspective, manufacturers still had plans to resume production of their equipment in the later stage, and their inventory was at a medium to high level, entering the stage of destocking in the later stage. Supply pressure was difficult to alleviate in the short term. The demand side was intertwined, with agricultural demand performing well, but industrial demand was progressing slowly, and overall demand was not increasing significantly. Taking all factors into consideration, in the near future, more and more regions will experience a decline in liquid ammonia, and the market will have some room for decline.

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