Price trend

In July, the domestic liquid ammonia market continued its downward trend from June, with the decline worsening compared to the previous month. According to the monitoring of the commodity market analysis system of SunSirs, on July 31st, the cumulative decline in the main production area of Shandong this month was 12.80%. Manufacturers in Shandong have reduced their prices by over 300 RMB/ton this month. As July 31st, the mainstream quotation for liquid ammonia in Shandong region was 2,400-2,700 RMB/ton.

Analysis review

On the raw material side, according to the monthly rise and fall chart of the liquid ammonia industry chain in SunSirs, the industry chain showed a pattern of more declines and less increases, with weaker midstream and downstream. Upstream natural gas prices have risen. But the boosting effect on downstream liquid ammonia was limited. On the one hand, coal ammonia companies were still affected by low coal prices, and their profits were still acceptable. In order to ensure that shipping companies were still willing to lower prices to attract the market. According to the Commodity Market Analysis System of SunSirs, the decline of thermal coal this month was 0.32%. Overall, it created a negative impact on the liquid ammonia market. At the same time, reflecting both supply and demand, the market still showed a relatively bearish trend.

On the supply side, there was high inventory pressure on enterprises, and in order to alleviate the pressure, factory prices continued to be lowered. On the one hand, as supply increases, manufacturers' shipments slowed down and inventory pressure rose. On the other hand, the large import volume and low-priced foreign sources had impacted the domestic market. Supply was in an oversupply situation. During the month, major factories in Shandong have repeatedly lowered the ex factory price of liquid ammonia by more than 300 RMB/ton.

From the demand side, downstream industries such as urea and compound fertilizers lacked support, resulting in a decline in the overall product line. Urea and ammonium nitrate have experienced significant declines. According to monitoring, urea fell by 6.6% in July, and ammonium chloride fell by 8.27%. Downstream weakness had further exacerbated the supply-demand imbalance.

Market outlook

The cost has not changed much, especially with coal prices continuing to be weak. In the short term, the downstream urea and compound fertilizer market continued to be weak, and ammonia companies were nearing the end of destocking, which is expected to alleviate supply pressure in the near future. In the later stage, downstream agricultural demand will rebound, and the price of liquid ammonia will stop falling. In the later stage, it may gradually seek upward space.

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