Grey rhino or black swan? Ammonium sulphate will keep going crazy?
As of January 20, the CIF price of ammonium sulfate in Southeast Asia has dropped by about US$13/ton compared with the previous week, and the export price in China has dropped by US$5/ton compared with the previous week; Either the order was completed in the week of January 9, or the price increased in the week of January 16. A few manufacturers in Shanxi increased by 75-155 yuan/ton, and manufacturers in Inner Mongolia and Ningxia increased by 95-150 yuan/ton. Ammonium sulfate can be said to be falling abroad and rising domestically. After the Spring Festival holiday, can the price maintain this upward trend? Can it continue to be crazy at a price above 1100 yuan/ton?
First look at the price comparison at domestic and overseas. As of January 20, China’s caprolactam grade AmSul was only about $168/ton, granular was about $197/ton, and the exchange rate was about 6.78. Converted back, the export price was only about 1,000 yuan/ton and 1,200 yuan/ton. At present, Steel Grade ammonium sulfate (powder/crystal) in Hebei, Henan, Shanxi, and Shandong mostly ex-work at 1100-1150 yuan/ton, which is not much different from exports. From this point of view, after the Spring Festival, agricultural demand will appear In a good situation, if the export list is slightly concentrated, the domestic price will rise slightly. However, domestic demand is very small compared to exports, which does not affect the overall situation. If the foreign price can rise steadily and slightly, it can also boost domestic prices, but if the foreign price keeps falling, then even if spring is the peak season for domestic demand, it will be a high probability grey rhino event that the price will gradually decrease.
The second is the comparison of the export price of ammonium sulfate VS urea. As of January 20, the China FOB guide price of urea was about $428/ton, and the granular ammonium sulfate was about $208/ton, and the nitrogen content was 46% and 20.5% respectively. Compared with urea, the export price is very low. The big advantage is that in 2023, the legal inspection for the export of urea and other chemical fertilizers should continue, and it will continue to not be inspected. There is still a large international demand, and the situation of high export volume and the price is still visible. It’s just that international crude oil and other bulk commodities have the trend of 2008. The international urea price will mainly go down, and the Chinese urea will also inevitably go down. We should not be too optimistic about the price of ammonium sulfate.
The third, there is a very special reason for the price increase of ammonium sulfate before the Spring Festival. At that time, manufacturers rushed to deliver more goods, and only a few manufacturers had goods for sale in the last week before the Spring Festival. Middlemen who export to Vietnam/Myanmar/Laos (used for rare earths) do not have holidays, and they don’t care about the price, as long as the goods can be delivered in time when there is demand. The transportation of ammonium sulfate by train is less restricted by holidays. The advantages of these manufacturers who can deliver it to Dali, and Yunnan (exported to Southeast Asia) are more obvious, so although the price increase of these few manufacturers is a bit abrupt, it can be explained.
To sum up, the export price is closely linked to the domestic price. Although the foreign ammonium sulfate price has fallen, it is still at a high level. The international urea price has fallen, but it is not particularly low. After the Spring Festival holiday, the domestic ammonium sulfate price will remain strong. If the black swan event of drastic changes in the international environment occurs, the sharp rise in the price of ammonium sulfate will continue to be staged.
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