Ammonium nitrate declines in the first quarter

Due to increased production capacity and poor demand, the ammonium nitrate market has recently staged a price war. Since November last year, the price of ammonium nitrate has fallen as a whole, with a drop of RMB 200-300 (t price, the same below). The price of porous ammonium nitrate in Shanxi, Inner Mongolia, and other places fell until January this year, stabilizing, the reduction rate of 50 to 100 yuan. At present, the price of industrial ammonium nitrate in the southern market is 2200 to 2300 yuan, in the northern market is 2300 to 2500 yuan, and porous ammonium nitrate is 200 to 300 yuan higher than industrial ammonium nitrate. Since the demand in the first quarter dropped by a few percent from the same period of last year, the price war in the ammonium nitrate market will not subside until the end of April.

The civil explosive industry is a high-risk industry. Every year during the Spring Festival and the Lantern Festival, the people's popping production companies have to leave for 15 to 30 days, and some even leave for 40 days. The explosives production companies are almost stopped or semi-discontinued from January to February. As the demand for ammonium decreased, the increase in ammonium nitrate inventory was basically expected. However, due to the increase in production capacity of some ammonium nitrate enterprises in the second half of last year, this year's rise in ammonium nitrate inventory was particularly significant. According to statistics, the total inventory of ammonium nitrate in the country is currently around 250,000 tons, up 66.7% from the same period of last year and 8.7% from the same period of the previous year.

For the whole year, it is expected that ammonium nitrate production will be 5.5 to 5.8 million tons, of which 3.8 million tons will be used in the domestic explosives industry, 250,000 tons will be used for export, and 1.5 to 1.75 million tons will be converted into nitro compound fertilizers. From the perspective of total spring demand, in the three major consumption areas of ammonium nitrate, agriculture and exports are basically the same as last year, and the demand for civil explosives has dropped by 15% to 20% compared with the same period of last year. In the coal industry, the coal market has been tense since the second half of 2010, which has boosted the demand for explosives and ammonium nitrate, especially for the open-pit coal mines represented by Inner Mongolia, Shanxi, and Xinjiang.

However, from the first two months of this year, due to the impact of climate and macroeconomic conditions, coal mines generally postponed the start of construction, and the decline in the use of ammonium nitrate in the first quarter has become a fixed trend. In terms of metallurgy and non-ferrous metals, the domestic and international steel situation in the past two years is not optimistic, and the contradiction between supply and demand is outstanding. Affected by the same production and demand of steel, the demand for explosives and ammonium nitrate will also decrease compared with the same period of last year. In addition, affected by the global extreme climate, the temperature ratio in northern China is lower than that in the same period in previous years, while in southern China it is more rainy and snowy. In addition, the “cold spring” phenomenon in spring, the start of various infrastructure construction projects has been delayed by nearly half a month compared to previous years. Even after the Lantern Festival, the project was still unable to commence construction. The demand for explosives in this area also decreased compared with the same period of last year, which led to the subsequent involvement of ammonium nitrate.

In the light of the above-mentioned weak fundamentals, the dawn of the ammonium nitrate market can only emerge in the end of April when it enters the civilian explosion production and fertility season. At that time, the stock of ammonium nitrate will gradually decline and the price may stabilize. According to previous years' experience, it is expected that the industrial ammonium nitrate price will stabilize at 2300-2500 yuan, the porous ammonium nitrate price will be stable at 2600-2800 yuan, and the stabilization time will last until the end of June.

After July, as new production capacity was put into the market, the demand for industrial ammonium nitrate fell in the high-temperature and rainy season, and the price of ammonium nitrate might go down in the second round. Geographically speaking, the capacity of ammonium nitrate in the Southwest and North China regions is relatively surplus. The top companies in Guangxi Liuhua, Yunnan Jiehua, Chuanhua, Sichuan Golden Elephant, and Tianji are all concentrated in these regions. In other regions, it is 150 to 300 yuan, while in the northeast region, due to the insufficient production of local ammonium nitrate, the price will be 50 to 100 yuan more than other regions.

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