Why does the price of ammonium chloride keep falling?

    I thought that 600 yuan/ton was the bottom price of wet ammonium (ammonium chloride with 23.5% nitrogen content), but recently the price fell to about 550 yuan/ton, which is the first variety in the fertilizer industry chain cut by half. Why the price of ammonium chloride fell "without bottom line"?

1. Supply remains high

    Thanks to the rapid development of photovoltaic industry, soda demand surges, the price is at a historical high, is the profit since last year "star" products. With the stimulation of high profits, the operation rate of hydrazine was at the highest in history, resulting in an increase in the supply of byproduct ammonium chloride.

2. Decrease in exports

    From January to March this year, 110,000 tons of ammonium chloride were exported, while before the implementation of legal inspection, China's monthly average export of ammonium chloride was about 100,000 tons.

3. Compound fertilizer with high nitrogen and high content reduces the use of ammonium chloride

    Ammonium chloride is suitable for the production of low content and low nitrogen compound fertilizer, but the overall trend of compound fertilizer is to high nitrogen and high content direction, so that urea replaces part of ammonium chloride in the production of compound fertilizer.

4. Inventory of ammonium chloride is very high

    Social and factory inventories of ammonium chloride may be as high as one million tons, which is historically high.

    The above is the main reason that the price of ammonium chloride continues to fall. Based on just a few of the above, it seems that the decline in the price of ammonium chloride will continue, but there are also positive factors:

1. Role reversal of urea and ammonium chloride

    In the past, ammonium chloride was mainly used as the raw material of compound fertilizer, while urea was more directly used by farmers. Now the roles of the two have changed: Urea is more commonly used as a compound fertilizer raw material, and ammonium chloride is more commonly made into compound nitrogen fertilizer (or extruded particles) for direct use by farmers. That is to say, urea occupies the market of ammonium chloride as a compound fertilizer raw material, and ammonium chloride occupies the market of urea as a direct use by farmers.

    As the price gap between ammonium chloride and urea widens, the price advantage of complex nitrogen fertilizer will become more obvious, and may replace urea directly used by farmers in large numbers.

2. Exports are likely to pick up

    With the relaxation of legal inspection, the export volume of ammonium chloride will increase, helping to reduce the pressure of oversupply.

Although there are the above advantages, but may not be enough to support the price of ammonium chloride, for hydrazine enterprises, must consider getting rid of the dependence on the compound fertilizer industry, to find a long-term way out for ammonium chloride.

Here's a look at the planting progress in the United States:

    In its weekly crop growth report, released early Tuesday, the U.S. Department of Agriculture (USDA) said 49% of corn was planted in the week ending May 7, compared with 21% a year ago, 26% the week before and a five-year average of 42%. U.S. cotton seeding rates were 22 percent, compared with 23 percent this time last year, 15 percent the week before and a five-year average of 23 percent. The U.S. soybean seeding rate was 35 percent, compared with 11 percent at this time last year and a five-year average of 21 percent, compared with 19 percent the week before.

    The author has formed the habit of paying attention to the progress report of agricultural planting in the United States in April, which comes from a story: In 2012, the author worked for a central enterprise. In April of that year, the international urea price soared, and one enterprise began to collect a large number of ports (at that time, there was an export window period, and the export could only be finished after the window period). The enterprise where the author worked also wanted to collect ports and bet on the international market in the later period. The leader consulted the author's opinion, the author quickly searched the website and found that the planting schedule in the United States was significantly ahead of schedule, so the reason for the sharp rise in international urea price was judged to be the demand in the United States in advance, which is not sustainable. When China's export window opens, the international urea price will inevitably fall, so it is suggested that the port cannot be gathered. Indeed, to June, international and domestic urea prices plummeted at the same time, port losses serious. The author may be the first to analyze the international fertilizer market in China by focusing on the progress report of American planting.

    According to today's US agricultural progress report, corn and soybean planting in the US is well ahead of schedule and will be nearing an end by mid-May. The US-led rally in international urea prices is losing momentum.