In March 2024, the global Urea Ammonium Nitrate (UAN) market experienced a prevailing sense of pessimism within the Asian and European markets. This decline can primarily be attributed to the reduction in costs of essential raw materials, notably Ammonium Nitrate. The reduction in Ammonia prices has significantly decreased production expenses, thereby exerting downward pressure on market prices.  Furthermore, a decrease in demand from significant downstream fertilizer markets, coupled with reduced planting activities, has also contributed to the overall decline in prices.

Throughout March 2024, the European UAN market has experienced a consistent downward trajectory, reflecting a previously observed trend within the month. One of the primary factors contributing to this trend has been the decrease in Ammonium Nitrate prices, which is a critical component in UAN production. This decline in the cost of Ammonium Nitrate has consequentially led to reduced production expenses within the region, resulting in a decrease in UAN prices.

Furthermore, adverse weather conditions, particularly prevalent in northern part of Europe, have exacerbated the situation. Heavy rainfall and unfavourable weather patterns have significantly hindered agricultural activities, thereby affecting the demand for fertilizers, including UAN. Consequently, there has been a noticeable slowdown in fertilizer procurement interest. Additionally, farmers have exercised caution, delaying their purchasing decisions until the last moment, potentially distorting the actual demand dynamics.

However, despite facing these challenges, it is important to note that manufacturing facilities within the region have sustained a satisfactory operational pace. Additionally, the international market has encountered a smooth flow of cargoes.

Similarly, the Chinese UAN market exhibited bearish sentiments during the first half of March 2024, with prices experiencing a notable decline of 4.6%. Surveys indicate that during this period, the supply situation of UAN within the Chinese market remained stable, with ample inventories available to meet the requirements.

Insights gathered from various market participants indicate a decrease in domestic UAN daily output, despite sustained high operational rates. Some facilities in Shanxi and Yunnan have resumed or increased production, while others in Shandong and Ningxia have decreased or halted production. Concurrently, demand from the international fertilizer market has remained subdued as the Chinese government continues its decision to suspend fertilizer exports until the conclusion of the domestic planting season.

Consequently, this has resulted in an accumulation of inventories within the domestic market. However, demand from the domestic fertilizer market has begun to increase as consumers prepare for the upcoming wheat planting season. Nevertheless, the demand has exhibited a slower pace than originally anticipated and has not had a significant impact on UAN prices.

According to ChemAnalyst's analysis, the UAN market is expected to undergo a downward trend in the coming months. This projection primarily stems from an anticipated decrease in seasonal demand and an expected surge in inventories. Such insights underscore the importance of considering seasonal fluctuations and inventory levels when assessing the future outlook of the UAN market.