This week (August 15-19), the price of domestic liquid ammonia fell at the beginning of the week. From the middle of the week to the end of the week, the market was mainly stable. The prices of Shandong, Shanxi, Hebei, Henan and Hubei declined compared with the previous weekend, but the range was not large, mostly in the range of 100-200 yuan. The market supply is tight, but the demand for fertilizer in the downstream is still sluggish. The psychology of buying up but not buying down leads to unsatisfactory transaction. According to the monitoring of business agency, as of August 19, the weekly drop of liquid ammonia in Shandong was 1.23%, and the mainstream quotation range at the weekend was 3400-3700 yuan / ton.
Supply side
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On the supply side, this week, the overall ammonia release in many places in China was slightly lower than that in the previous week, especially in the southwest and Inner Mongolia. In addition, the electricity restriction in Anhui also affected part of the supply, and the market supply decreased due to the maintenance of manufacturers in Shandong and Hebei. Under the condition of very weak demand, the continuous contraction of supply is the main reason for the price bottoming and stabilizing.
Cost side
Upstream coal prices fluctuated, rising by 1.02% this week, but prices remained high. The profit of downstream liquid ammonia is constantly squeezed. However, the coal price regulated by the state is still within a reasonable range. The downstream cost pressure is not great. At present, the profit of downstream methanol and liquid ammonia manufacturers is still within a reasonable range. Natural gas prices also fell this week, easing the cost pressure of gas head enterprises. According to the monitoring of business agency, the decline of liquefied natural gas this week was 2.98%.
Demand side
From the terminal point of view, the downstream demand for liquid ammonia is stable and there is no increase. The price of urea rose slightly, only 0.17%. Other products such as ammonium nitrate (- 4.11%) and ammonium chloride (- 5.37%) showed weak performance, with a significant decline. From the perspective of demand, agricultural demand is tepid and industrial demand is mainly. In particular, affected by the power limitation in Sichuan, the operating rate of manufacturers has dropped significantly, and urea plants have been shut down one after another, and the demand has dropped to the freezing point. Superimposed on the high price rise of coal in the upstream, liquid ammonia can be said to be under attack.
From the above figure, it can be seen from the price comparison chart of urea and liquid ammonia that the trend of liquid ammonia and urea is basically the same. Since the decline of urea is more obvious than that of liquid ammonia, the price difference between them is significantly narrowed.
From the above figure and the liquid ammonia industry chain diagram, it can be seen that the profit of the liquid ammonia industry chain continues to narrow, and the natural gas price in the upstream of the gas head has been falling, but the coal price is high. Although the price is still controlled by the policy, the middle and lower reaches still show general cost pressure. Due to the weakening of seasonal demand, the decline of compound fertilizer in the middle and lower reaches is obvious, and the profit of the enterprise meets the test. The profit of liquid ammonia, urea and compound fertilizer is significantly lower than that in the previous period.
Future forecast
The Business Association believes that at present, the supply and demand of the domestic liquid ammonia Market are still uncertain in the near future, especially due to the power limitation in Southwest China. In the short term, it may face the trend of tight supply. In the later period, it is necessary to continue to observe the operation of the manufacturers. The supply side is mainly good in the short term, but the demand side is not optimistic. On the one hand, the agricultural demand continues to be weak. In addition, the industrial demand also remains strong, and the impact of the epidemic is superimposed. It is expected that the short-term rigidity of liquid ammonia is strong, but the possibility of a large rebound is low.
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