Ammonia Market Prevails Bearish Trend in the US, Prices Surge in Asia

Throughout the week ending on May 3rd, the Global Ammonia market experienced diverse patterns across different regions. Notably, the western market saw a decline, while the Asian market sustained an upward trajectory. This disparity in Ammonia market behaviour can be linked to various factors such as regional demand fluctuations, economic uncertainties, and regulatory frameworks.

The US Anhydrous Ammonia market witnessed a marginal decrease of 1% throughout the current week, representing a deviation from the established trend observed in the preceding week. Despite the upward trajectory of the essential feedstock material, Natural Gas, during this period, its impact on Ammonia prices exhibited a degree of mitigation. The prevailing decline in Ammonia prices can be ascribed to a sustained reduction in demand from importing nations, particularly notable in South America. Concurrently, demand within the domestic Ammonia market experienced fluctuations, notably influenced by downstream fertilizer markets reacting to variable weather conditions within the country. Moreover, there was a surplus supply of Ammonia noted within the North American market, and notably, no considerable impediments in export activities were reported, notwithstanding persistent trade uncertainties.

Furthermore, on March 28th, the US Department of Agriculture revealed a substantial investment of USD 124 million in renewable energy and fertilizer production ventures spanning 44 states. This strategic endeavour is geared towards alleviating input costs for agricultural producers. It is anticipated to yield approximately 3,800 tonnes of dry fertilizer per year, distributed across three facilities located in Iowa and Nebraska. With a cumulative production capacity of 11,400 tonnes, these initiatives are projected to benefit around 1,500 producers. This investment not only promotes sustainable agricultural practices but also strengthens economic resilience within the fertilizer sector. Consequently, it may impact the price of Ammonia, reflecting the evolving dynamics within the industry.

On the other hand, the Chinese Ammonia market witnessed a minor increase of 2.3% in value over the course of the current week, a departure from the trend observed in the preceding week. This significant upswing in prices can be primarily ascribed to a resurgence in demand, compounded by a shortfall in available material within the Chinese market. During this timeframe, reports surfaced indicating a modest scarcity of the material in question within the market. Insights gathered from a diverse array of market participants revealed a daily decrease of approximately 3%-4% in output within the primary production hub of Shandong.

Furthermore, in the first week of May 2024, domestic Ammonia demand stayed steady as consumers prepared for the Rice and Cotton planting season. However, international demand remained moderate, particularly in Europe where wet conditions hindered crop cultivation. These factors widened the gap between demand and supply, contributing to an increase in Ammonia prices.