After the Spring Festival, the ammonium chloride market faced another downturn since 2012. Reports indicate that prices in major regions of the country dropped from around 600 yuan/ton to approximately 550 yuan/ton in January 2014, 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 decline was partly due to a one-month demand gap and continued production by upstream alkali companies during the holiday, leading to increased inventory levels.
The prolonged weakness in the ammonium chloride market is driven by several factors. First, on a macro level, profit margins remain tight. Since 2008, railway freight rates have not seen significant increases, despite a more than 13% annual growth in agricultural fertilizer transport costs. Due to varying transportation methods across regions, the post-holiday rise in rail freight did not provide strong support for the ammonium chloride market. Additionally, currency depreciation has had limited impact on exports, with international demand remaining weak and no short-term shortages expected.
Second, high operating rates and overstocked inventories are putting pressure on the market. Ammonium chloride is primarily a by-product of alkaline companies, which continue normal operations during the Spring Festival. The gradual increase in new production capacity has led to excessive inventory, forcing companies to focus on clearing stock, which has further depressed prices. According to rough estimates, the average operating rate of ammonium chloride producers is still around 60%, with some plants forced to halt operations as prices hit cost levels. Some companies have been dragged down by both low prices and high inventory, causing a decline in sodium carbonate prices as well.
Third, the start of the spring plowing season has not significantly boosted demand. In Hubei Province, fertilizer demand is expected to reach 5 million tons, with about 3.5 million tons in reserves. Jiangsu’s demand is roughly 1.5 million tons, with Suonong Group holding over 500,000 tons. Shaanxi’s demand is around 1 million tons, with 600,000 tons in reserves. By the end of February, Hunan had over 1.3 million tons in agricultural chemical reserves, highlighting a clear supply-demand imbalance. Pre-stocking in other regions has largely met agricultural needs. Overall, the current spring plowing demand has not provided much support to the ammonium chloride market, and it continues to trade sideways.
Fourth, falling urea prices have created a substitution effect against ammonium chloride. As the leader in nitrogen fertilizers, urea has not seen price increases and has actually declined as the farming season approached. In Shandong, the actual transaction price is around 1,500 yuan/ton, with local efforts to stabilize prices. Mainstream quotes in the two rivers have dropped to 1,500 yuan/ton, while in Shanxi, transactions are at 1,480–1,490 yuan/ton. From a demand perspective, high-nitrogen fertilizers and BB fertilizers remain the main trend in compound fertilizers. The downward trend in urea prices and its substitution effect on ammonium chloride will likely worsen the already sluggish market. If urea stabilizes later, ammonium chloride companies may adjust accordingly.
Currently, the trading atmosphere in the ammonium chloride market remains weak, with limited transactions taking place. Taken together, the market is facing multiple negative factors, and there is little hope for a quick recovery in the near term.
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