After the Spring Festival, the ammonium chloride market faced another significant decline, marking a challenging period since 2012. In early 2014, prices in major regions of China dropped from around 600 yuan/ton to approximately 550 yuan/ton for dry ammonium chloride, while wet ammonium chloride fell from 500 yuan/ton to about 450 yuan/ton. In some areas, actual trading volumes even dipped below 400 yuan/ton. This slump was partly due to the one-month demand gap following the holiday, combined with the continued normal production of alkali companies during the festival, which led to increased inventory levels.
The sluggish performance of the ammonium chloride market can be attributed to several factors. On a macro level, the limited profitability of the industry has been a concern. Since 2008, railway freight rates remained unchanged until 2010, but the annual growth in agricultural fertilizer freight costs exceeded 13%. However, due to regional differences in transportation methods, the post-holiday rail freight increases did not provide strong support to the ammonium chloride market. Additionally, currency depreciation had little impact on exports, and international demand remained weak, with no signs of short-term shortages.
On the company level, high operating rates and overstocked inventories have further pressured the market. Ammonium chloride is a by-product of alkaline companies, and most of these enterprises continued normal operations during the Spring Festival. The gradual increase in new production capacity added to the inventory burden, forcing companies to focus on clearing stock, which led to sustained price declines. According to rough estimates, the average operating rate of ammonium chloride producers remains around 60%, with some companies forced to halt operations due to prices hitting cost levels. Others have suffered from low prices and high inventory, dragging down the price of sodium carbonate as well.
The start of the spring plowing season also brought limited demand. In Hubei Province, fertilizer demand is expected to reach 5 million tons, with about 3.5 million tons in reserves. Jiangsu’s chemical fertilizer demand is around 1.5 million tons, with Suonong Group holding over 500,000 tons. Shaanxi’s demand is roughly 1 million tons, with 600,000 tons in social reserves. By the end of February, Hunan had more than 1.3 million tons in agricultural chemical reserves, highlighting a clear supply-demand imbalance. Pre-stocking in other regions has largely met agricultural needs, and overall, the spring plowing demand has not significantly boosted the ammonium chloride market, leaving it in a sideways trend.
Moreover, the drop in urea prices has created a substitution effect, further pressuring the ammonium chloride market. As the leading nitrogen fertilizer, urea has seen a decline in prices as the farming season approached. In Shandong, the actual transaction price is around 1,500 yuan/ton, and local suppliers are trying to stabilize it. Mainstream quotes in the two river regions have fallen to 1,500 yuan/ton, while in Shanxi, the actual transaction price is between 1,480 and 1,490 yuan/ton. Given that high-nitrogen fertilizers and BB fertilizers remain the main direction for compound fertilizer development, the falling urea prices and their substitution effect are worsening the already depressed ammonium chloride market. Once urea stabilizes, ammonium chloride producers will adjust accordingly.
Currently, the trading atmosphere in the ammonium chloride market is weak, with limited transactions taking place. Overall, the market is being weighed down by multiple negative factors, and there is little hope for a quick recovery in the near term.
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