In August 2023, the domestic liquid ammonia market emerged from a trend of pre emptive suppression, with a decline at the beginning of the month, stable operation in the middle of the month, and a strong rise in the market in the latter half of the month. According to the Commodity Market Analysis System of the Business Society, the monthly increase in liquid ammonia is 1.89%.

At the beginning of the month, liquid ammonia reversed the previous month’s upward trend and briefly declined due to increased supply pressure. The main reason is that the supply in Shandong region has increased, and some of the faulty enterprises have resumed operation. The changes in construction are mainly concentrated in Shandong and Hubei, affecting the northern and central plains regions. Supply expectations are expected to perform leniently. The large number of imported goods arriving at the port has had an impact on the domestic liquid ammonia market. Large factories in Shandong, Hebei, Hubei, and other regions have repeatedly lowered factory prices this week, with a cumulative reduction of over 200 yuan/ton in the first week of August.

In the middle of the month, the market gradually stopped falling and stabilized, mainly due to the easing of supply pressure. On the one hand, the construction of the Northern Main Production Area Alliance and Mingshengda devices has been affected, resulting in a decline in production. And the postponement of resumption of production in Mingshui Dahua. The performance of the superimposed market demand is acceptable, with an increase in new orders and an improvement in supply and demand, enabling the ammonia market to stabilize and rebound.

In late October, liquid ammonia experienced another rise, mainly due to the tight supply performance in the main production areas in the north, which was supported by tight supply. Some devices in the northern region are still undergoing maintenance, and sudden production restrictions in regions such as Shanxi have led to a short-term decline in enterprise operating rates and tight supply. There is a widespread phenomenon of vehicles queuing up for goods in production enterprises. As of the week ending August 27th, the manufacturer’s quotation has been raised multiple times, with a cumulative increase of over 200 yuan/ton. The dealer’s offer naturally rose. The market did not continue until the end of the month. In the week of August 31st, liquid ammonia prices gradually stabilized and the market returned to rationality.

Future Market Forecast

In terms of supply, there are multiple units in Hebei, Henan, Yunnan, and the two lakes regions that are expected to recover, and the supply pressure in the later stage cannot be underestimated. Currently, some units in Shandong have been reduced in quantity to hedge against supply pressure. Further device reduction will not be ruled out in the later stage.

On the demand side, agricultural demand is mainly light, while some compound fertilizers remain in high demand. Especially in the industrial sector, the performance is poor, and the operating rate of enterprises is still showing a downward trend due to the decline in profits. There will also be some pressure on later demand.

Overall, liquid ammonia analysts from Business Society believe that the supply and demand structure of liquid ammonia may reverse, and a pattern of oversupply may form. Therefore, it is expected that there will be some room for a pullback in liquid ammonia next month.