The high level of urea hovers, and the industry has basically reached a consensus. This view seems to apply to the urea market in the short to medium term. The production price of urea in Shandong and Hebei has been above 2400 yuan/ton for a long time. If we only consider the price of a single nitrogen element, there is indeed room for increase in the production price of ammonium sulfate in Shandong and Hebei, such as 665-720 yuan/ton. Today, some ammonium sulfate manufacturers in Shandong and Henan have slightly increased their prices compared to the previous week, Is ammonium sulfate really going to hit the bottom and rebound?

Let's first take a brief look at the reasons why urea prices are hovering at a high level: some bullish people say that daily urea production has been so high, international prices have also dropped, urea social inventory is still relatively low, and weak storage customers have not yet taken too much quantity. The production of weak storage fertilizer by composite fertilizer enterprises is also ongoing and has not yet reached its peak, and the gap in the later stage is still there. Therefore, it is reasonable for urea prices to hover at a high level in the short term; Some bearish bearers believe that various meetings, relaxed inspections of light storage, legal inspections lasting more than 60 working days, and export quotas in 2024 have shown our confidence in ensuring supply and stabilizing prices. The export situation in the spring of next year will also be poor, and the daily production from February to March will rebound from the ultra-low level in mid December to a relatively high point of 185000 tons or even 190000 tons. February to April is a time when the release of light storage fertilizers is relatively concentrated, and urea prices may be lower at that time.

Let's take another look at the support of urea for ammonium sulfate: As mentioned at the beginning, in China, the mainstream urea production in Shandong and Hebei is generally above 2400 yuan/ton, and very few low-end factories are below 2350 yuan/ton. Even if calculated based on low-end factories, urea has a nitrogen content of 46%, ammonium sulfate has a nitrogen content of 20.5%, and ammonium sulfate can still be maintained at 1100 yuan/ton, at least 1000 yuan/ton. However, domestic compound fertilizer enterprises Lysine enterprises and rare earth customers do not consume a high proportion of ammonium sulfate in the total production, which may only be around 20%. It has been heard that some compound fertilizer enterprises have resumed production or increased their load recently, and rare earth customers in Jiangxi, Fujian, and other regions have also shown some enthusiasm in receiving goods. It is possible for the price of ammonium sulfate to rise for a period of time, after all, there seems to be room for an increase of 200-300 yuan/ton at a price of around 700 yuan/ton.

The support for exports has turned from strong to weak, and the drag of international urea prices on international ammonium sulfate is somewhat obvious. International urea prices have been falling intermittently for nearly two months, and international ammonium sulfate has just fallen for about a month. This is because Brazil and other places received relatively large quantities of goods in October (China exported about 1.475 million tons of ammonium sulfate in October, an increase of 4% year-on-year). Initially, international ammonium sulfate prices could still hover at high levels, The concentration period of receiving goods from Brazil came to an end soon, and the weekly decline of ammonium sulfate from a few tens of yuan since October to over 150-200 yuan/ton in late November can be described as oversold! If there is a certain rebound in prices in the near future, it is also reasonable.

However, it remains to be observed whether major receiving countries such as Brazil recognize the current factory price of around 700 yuan/ton in China, as most of China's ammonium sulfate flows internationally and exports may account for 70-80% of the total production. The current delivery prices in Southeast Asia are already very low, and the low-end CIF price is less than $130/ton, equivalent to an offshore price of less than $105/ton in China. How to calculate, the current price of around 700 yuan/ton seems to be difficult to obtain too many export orders. The next step is still stable, and sustained comprehensive price increases still require stronger support, such as which order is larger and which export order is more urgent.
In short, urea provides some support for ammonium sulfate, but ammonium sulfate still needs to consider its own export orders.