ammonium sulfate seems to be only a short-term bottoming out
As we all know, the fertilizer market has been weak recently, and ammonium sulfate seems to be thriving again.
After two consecutive weeks of plummeting, the price has stabilized this week. Some manufacturers of coking by-product ammonium sulfate in Shanxi have increased by 60-70 yuan/ton , Some low-end prices in Shandong and Hebei also rose by about 10-15 yuan/ton. Has the price of ammonium sulfate bottomed out? Can it bounce back smoothly?
First of all, the export volume and export price have remained high. In 2022, China’s ammonium sulfate export volume reached 12.45 million tons, a year-on-year increase of 16.9%; from January to February 2023, the export volume reached 1.78 million tons, a year-on-year increase of 11.6%. The export accounts for a large proportion of the total demand, which may reach 70-80%.
However, the reason for the recent drop in domestic prices is that international ammonium sulfate prices have not stabilized due to the weak international urea prices. International ammonium sulphate has continued to fall, but the export price of ammonium sulphate in my country has fallen relatively slowly. The number of export orders to be executed has decreased to a certain extent compared with the previous two months, and the execution of a few export orders has been suspended. After two consecutive weeks of weekly declines of 100-200 yuan/ton in China, some manufacturers have a certain amount of exports ready to go, and domestic prices are showing signs of bottoming out.
As of March 24, the FOB guide price of caprolactam grade in China, was around US$160/ton, and the FOB price of granular ammonium sulphate was more than US$20/ton higher. According to the current FOB price, the domestic price should indeed bottom up. However, the price in the latest bidding for small quantities in Southeast Asia is more than US$10/ton lower than the FOB price in China. It is estimated that the FOB price in China will not follow so closely. It can only be said that the price seems to have bottomed out only temporarily.
Second, domestic demand is gradually increasing, but the proportion of domestic demand is too small to play a decisive role. The price of urea is relatively high. Hebei urea ex-factory quotation is 2640-2650 yuan/ton, and Hebei coking by-product ammonium sulfate ex-factory is 815-855 yuan/ton. The nitrogen content is 46% and 20.5% respectively. It is more cost-effective to use ammonium sulfate. For the time being, compound fertilizer companies are more willing to use ammonium sulfate. However, the domestic demand for ammonium sulfate is very small compared to exports. The cost-effective urea or ammonium sulfate can be used, which does not affect the overall situation.
In view of this, if the foreign ammonium sulfate price can rise steadily and slightly, it can also boost the domestic price, but if the foreign price keeps falling, then even if spring and summer are the peak seasons of domestic demand, the price will hardly change the fate of falling.
Again, there is a very special reason for the price increase and fall of ammonium sulfate. The middlemen who were engaged in the rare earth market and exported to Vietnam/Myanmar/Laos for rare earth around the Spring Festival were active for about two or three weeks. At that time, the price soared. The middlemen in China don’t care much about the price, as long as the goods can be cashed in time when there is demand; then the demand in this area cools down, and the price turns from a small fluctuation to a sharp drop.
One of the driving forces behind the price increase of a few coking by-product ammonium sulfate manufacturers recently may be that these rare earth middlemen have resumed a certain amount of purchases.
Finally, there are fluctuations in supply, but mainly increase. The income of the coking plant is not good, and the start of operation may be adjusted later. This is a reduction. The production capacity of the by-product ammonium sulfate of lithium iron phosphate in the South has increased by more than 200,000 tons. The specifics need to be observed. This is an increase.
In short, ammonium sulfate seems to be only a short-term bottoming out, and there may be a new round of decline in the future. Whether it falls or not, we should pay attention to the international price trend.
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