Low Demand Leads a Decline in Ammonia prices in China, while USA Sees a Partial Rebound

The Ammonia market exhibits divergent trends in the global market throughout the inaugural week of July 2024. The prices declined in the Asian market but surged by a slight margin in the USA. This price surge in the North American market is primarily attributed to a optimised availability of material in North America amidst reduced manufacturing activities and forced majeure of some Ammonia emitting units owing to Hurricane Beryl. On the contrary, the Chinese Ammonia market plunged during the same period in the face of dwindling demand from downstream industries.

The North American Ammonia market witnessed a significant surge during the inaugural week of July 2024, continuing a trend observed in the previous week. Despite a decline in the price of essential feedstock natural gas during this period, its impact on Ammonia prices remained somewhat mitigated.  The primary driver behind this price increase is the widening gap between demand and supply. Following the impact of tropical storms, widespread flooding and disruptions in transportation infrastructure occurred, significantly hampering logistics and supply chains. Additionally, prolonged power outages resulting from Hurricane Beryl further disrupted manufacturing operations across the region. Compounding these challenges, major Ammonia-producing units in Texas, such as YARA/BASF and OCI, with production capacities of approximately 42,452 metric tons per month and 18,742 metric tons per month respectively, declared force majeure at the beginning of the week. This declaration further exacerbated the supply situation in the region, contributing to the observed shortage of Ammonia.

Simultaneously, throughout recent weeks, demand for Ammonia has remained moderately high in both the domestic and international markets. This robust demand was attributed to favourable weather patterns, particularly in the Western Corn Belt, where rounds of heavy rain and thunderstorms have created optimal conditions for corn planting.

On the other hand, the Ammonia market in China demonstrated bearish sentiments during the first week of July 2024. During this period, the demand for Ammonia remained moderately low, with only a few inquiries observed from the domestic market by the end of the week. International demand also remained restricted due to delayed deliveries caused by port congestion.

In addition to this, statistical data gathered from various market sources indicate that the production rate of Nitrogen based fertilizers including urea in China continues to fluctuate, with the average level being around 177,000 to 178,000 tons per day. This increase in production capacity and inventory has ensured a steady supply of urea, contributing to the surplus observed in the market. The ample supply of Ammonia has led to a well-stocked market, further driving down prices.