In May, domestic liquid ammonia continued to decline, with a slight slowdown in the decline compared to the previous month. According to the Commodity Market Analysis System of Shengyi Society, the decline in liquid ammonia in Shandong Province in May was 5.88%. As of the end of the month, the mainstream price of liquid ammonia in Shandong region is between 2200-2350 yuan/ton.

The dual high supply pressure of internal and external sources of goods is increasing and decreasing
From a supply side perspective, the supply-demand structure continues to be in an oversupply situation. As we enter May, the operating rate continues to increase. Previously, maintenance companies have resumed work one after another, coupled with an increase in ammonia conversion capacity. The inventory pressure of enterprises is high, and in order to alleviate the pressure, factory prices continue to be lowered. Furthermore, the import volume has continued to increase compared to April, with low-priced foreign sources impacting the domestic market. Supply is in an oversupply situation. During the month, major factories in Shandong have repeatedly lowered the ex factory price of liquid ammonia, with a range of 200-300 yuan/ton. From the demand side perspective, in the traditional off-season, downstream industries such as urea and compound fertilizers lack support, and industrial demand remains rigid with little fluctuation. Downstream weakness has further exacerbated the supply-demand imbalance.
The cooling of the industrial chain is mainly due to the weakness of the upstream and downstream
From the perspective of the liquid ammonia industry chain chart, the performance of the upstream and downstream environment of liquid ammonia is weak, and the upstream natural gas continues to be weak, with a monthly decline of 4.26%. Especially in the downstream sector, it is still generally cold, with more declines and less gains. Formic acid has the largest decline, at 21.05%, while urea is still lukewarm. This is mainly reflected in weak downstream demand and the off-season in agriculture. Currently, the increase in compound fertilizer production has not met market expectations. The terminal production in the industrial demand field is also showing a downward trend. The market is generally dominated by rigid demand, and the demand side is restricting the ammonia market from getting out of the slump.
From the perspective of urea, the urea market has been sluggish. According to Shengyi Society, urea slightly rebounded in May, with a growth rate of 0.91%. The rebound in urea prices is mainly due to the increase in the amount of ammonia converted by enterprises, which further exacerbates the contradiction of excess liquid ammonia. Downstream procurement has not significantly increased, and the market performance has remained calm.
Market forecast:
Business analysts believe that from a supply side perspective, the market supply and demand pressure will not decrease next month, and the impact will tend to weaken as the equipment will be on and off. The mentality of enterprises to raise prices may be reflected, and the downward space in the later stage may be compressed. In addition, there may be an increase in ammonia conversion enterprises in the later stage, and there is a trend of increasing ammonia production. The supply and demand pressure in June should not be underestimated.
On the demand side, in the short term, demand remains stable, and expectations for the later period may be weak. On the one hand, during the agricultural off-season, trading is light. In addition, industrial demand remains dominated by rigid demand, and overall, downstream liquid ammonia may continue to drag down its price recovery in the later stage.
Taking all factors into consideration, the price of liquid ammonia is expected to hover at a low level in the short term, and in the later stage of supply and demand competition, the ammonia market may enter a volatile range, further narrowing the range of price fluctuations. We need to pay attention to the manufacturer’s equipment start-up news in the later stage.