This week, the domestic liquid ammonia Market accelerated downward. Liquid ammonia continued the decline in the previous two weeks, and the decline deepened this week. According to the monitoring of business society, liquid ammonia fell by 12% in August and 7.53% this week (8.23-26).
Previously, under the influence of enterprise maintenance and domestic shortage, liquid ammonia first experienced a soaring market in mid and late July. However, the good time is not long. Since the end of July, the price of liquid ammonia has continued to decline. On the one hand, the epidemic has led to poor traffic and inventory backlog. On the other hand, the high opening rate of enterprises has led to a surge in output. Without any favorable demand, liquid ammonia fell again and again. Up to now, the price of liquid ammonia in China is 4000-4200 yuan / ton, and it has fallen below 4000 yuan in some areas.
On the cost side, liquid ammonia deviates from the upstream coal market. Due to the increase of cost pressure and the downward impact of liquid ammonia price, the profits of ammonia enterprises have shrunk sharply, and now they are hovering on the edge of loss. The domestic coal market continues to be hot. According to the monitoring of the business community, as of August 26, the price of thermal coal rose by 5.29% this week. At present, the price of thermal coal is close to 1100 yuan / ton（ (see figure above)
On the supply side, in mid and late August, domestic ammonia enterprises ushered in a centralized production resumption period. Previously, many sets of units were overhauled in various places, and units in the maintenance period were started in Shandong, Hebei, Ningxia, Anhui, Hubei and other regions, with a significant increase in market supply. More importantly, in the early July, affected by the domestic epidemic, the traffic was poor, the shipment of ammonia enterprises decreased, and the manufacturer’s inventory continued to rise, forcing the price of ammonia enterprises to fall again and again. In the first four working days of this week, some enterprises fell by 500 yuan / ton.
On the demand side, urea continued to decline in mid and late August. According to the monitoring of business society, the decline deepened this week, with a weekly decline of 5.45%. Weak demand side is the main reason for the decline of urea. After entering August, the domestic agricultural demand for urea has basically ended, the procurement has slowed down, and the increment of industrial demand is also insufficient. The recession on the demand side has led to the continuous accumulation of industrial inventory, the continuous price reduction of manufacturers and the pessimistic downward market.
In the future, the supply pressure of domestic ammonia is still obvious, but at present, the price is low, the upstream cost surges, the enterprise pressure increases significantly, and the demand side. It is expected that the seasonal increment space of compound fertilizer will be limited in September, and the agricultural and industrial demand will still be weak. Therefore, it is difficult to be optimistic about the price of liquid ammonia. However, considering the deviation of cost, it is not ruled out that the manufacturers will reduce the load next, On the whole, the bottom of the market is not far away, but it will take time to reverse.
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