Ammonia: Market Fluctuates Rapidly
The synthetic ammonia market kept rising after the National Day holiday, supported by unexpected output cuts in some regions and shipments demand to port. Low inventory and staged restocking from downstream buyers, plus sporadic temporary production reduction, boosted market sentiment. New auction prices climbed and manufacturers lifted offers. Prices surged CNY300-600/t, hitting CNY2,900-3,010/t in Shandong.
However, the rally reversed rapidly later. The short-term maintenance mostly resumed production. Supply kept rising amid price hikes with temporary extra supply from some plants. Market commodity ammonia supply came up to 40kt/day. Downstream buyers resisted high prices. Constrained by losses and environmental policies, downstream demand slow down. Fundamentals weakened and prices slid fast. Currently commodity ammonia supply stands at 39.7kt (+9.7% from the holiday low of 36.2kt).
Maintenance units in Inner Mongolia, Jiangsu and Anhui are set to restart, which may further lift supply. Yet overall output is unlikely to surge sharply again. Ample supply caps the market. Widening regional price gaps, high-priced cargoes face further corrections.
Demand offers limited support. Downstream buying interest faded amid high priced raw materials and operation rates fall, coinciding with slack agri. demand. MAP operation rate dropped 4.58% week-on-week, compound fertilizer rate dropped 1.3% WoW. Environmental inspection in Hubei and high phosphate inventories further curtail downstream output.
Acrylonitrile stays deep in the red, with average weekly loss at CNY -2081/t (-CNY483/t WoW). Producers in Shandong and Zhejiang cut operation rates. Caprolactam plants also reduced loads amid losses.
Weak fundamentals, bearish sentiment and regional spillover risks may trigger further price corrections. Supply remains abundant, 40kt commodity ammonia on market may become normal. Agri. demand is slow and industrial demand is flat. Lower prices may lift downstream buying and port shipment volumes. Current high coal prices support the production cost. Output are likely to cut if prices fall below cost. The market may stabilize and fluctuate after another CNY200-300/t drop.
