How Growing Need for Fertilizers Impacting the Demand for Nitric Acid Globally
- 14-Apr-2022 1:43 PM
- Journalist: Rene Swann
Over the last few weeks, the price of Nitric Acid has touched unprecedented heights in the global market, with traders blaming the rising fuel and freight charges for the increase in rates. The downstream prices for liquid Ammonia, which is used in manufacturing Nitric Acid, climbed by 10.4% in the last month, whereas Aniline grew by 0.26 %, TDI climbed by 3.81 %, and Potassium Nitrate increased by 11.9 %. Furthermore, rising crude oil prices amid tensions between Russia and Ukraine boosted the upstream cost of Nitric acid, resulting in a price hike.
Due to high downstream demand, Nitric Acid prices in Germany jumped by 2.5 percent this month. A global increase in the need for fertilizers led to a rise in Nitric Acid demand in Germany's domestic market. Furthermore, demand for another downstream commodity, polyurethane, was strong, driving up the Nitric Acid prices. Germany's nitric acid prices have risen due to increased demand for fertilizers and polyurethane and energy costs. Finally, the FOB Hamburg prices for Nitric Acid 98% was assessed to be USD 420/MT, in last month.
Nitric Acid costs in the United States climbed by about 3% in March. Rising upstream natural gas and coal prices and a disrupted supply chain prompted by western sanctions on Russia, the world's largest exporter of feedstock ammonia, were blamed for the steep spike. Farmers are utilizing fewer Nitric Acids due to the sky-high fertilizer prices, which is a critical negative factor in the regional market and a reduction in planting area across the US. During the winter slump, manufacturers looked to be under little pressure to change their offers. Because of the high demand, Nitric Acid98 percent FOB New York price talks remained consistent in March and averaged at USD 380/MT.
Nitric Acid costs in China have increased by 4.1 percent on a month-to-month basis. Manufacturers have been facing many supply-chain challenges, including increased energy, raw material, packaging, and transportation prices. While most farmers and agrochemical specialists reported losses this week, the stress will be passed on to consumers, putting upward pricing pressure on prices. Carriers will be concerned about the Nitric Acid price increase because they already deal with inflationary pressures on multiple fronts. The cost of Nitric Acid FOB Dalian increased by 98 %, resulting in the monthly average prices of USD450/MT in the domestic market.
In April, Nitric Acid prices in India showed a bullish trend, with the 60 percent Nitric Acid displaying a growing trend. Due to a supply shortage, nitric acid prices have surged in the domestic market. According to the market, downstream customers were also in strong demand for nitric acid. As prices rose, downstream producers of ammonium nitrate felt the pinch. According to Chambal, a significant fertilizer firm, the need for Technical Ammonium Nitrate is short on supply in the domestic market and hence the gap is covered through imports.
Furthermore, Deepak Nitrile, a key player in the Indian industry, has proposed a project that comprises a factory that will manufacture around 1,80,000 metric tonnes of weak Nitric Acid per year.
As per ChemAnalyst, "The global rise in Nitric Acid costs have been pressurizing the manufacturers, and hence it is expected that similar peaks might be observed during Q2 of 2022."