SunSirs: Ammonium Sulfate Peaks and Retracts, Entering a Phase of Volatile Consolidation

According to the China Chemical Industry News, since March, ongoing international geopolitical conflicts—coupled with concentrated domestic fertilizer stockpiling for spring plowing and a surge in overseas bulk purchasing—have created a powerful synergy between domestic demand and exports for ammonium sulfate. Consequently, prices have soared continuously, hitting a new multi-year high. Statistics indicate that by early May, the overall price increase in the domestic ammonium sulfate market for the year had exceeded 60%, with high-purity products seeing gains of over 80%. However, starting in mid-May, the bullish market supports for ammonium sulfate began to weaken across the board, shifting the market from an upward cycle into a phase of volatile consolidation.

"After mid-May, the peak season for spring plowing fertilizer usage came to a definitive close, and the pace of overseas export orders slowed down; consequently, signals of softening downstream demand for ammonium sulfate became increasingly evident. As of May 15, quoted prices for coking-grade ammonium sulfate in major domestic production regions had retreated to the vicinity of 1,300 RMB/ton (unless otherwise specified). Although prices for high-purity products remain at relatively high levels, they, too, have begun to loosen and show signs of weakness. It is anticipated that the ammonium sulfate market will fully return to a rational phase of consolidation, and the price spread between high-quality and lower-quality products will continue to narrow," observed Shao Huiwen, a veteran market commentator.

Spring Plowing Peak Season Concludes; Downstream Essential Demand Contracts

According to Liu Changqing, an agricultural supply dealer in Xiayi County, Henan Province, March and April constitute the "golden window" for fertilizer application during spring plowing across China's three core agricultural regions: North China, Northeast China, and Northwest China. During this period, downstream compound fertilizer manufacturers significantly ramp up their production activities, driving concentrated procurement of ammonium sulfate raw materials and sustaining a surge in market demand. However, upon entering mid-May, large-scale spring sowing operations nationwide drew to a close, and agricultural fertilizer usage entered its traditional off-season; as a result, the seasonal essential demand for ammonium sulfate has retreated rapidly.

Data indicates that by mid-May, the operating rate of domestic compound fertilizer manufacturers had plummeted to approximately 36%. Resistance to high-priced ammonium sulfate intensified, and the prevailing market sentiment—characterized by a "buy on the rise, hold on the fall" mentality—grew stronger. Consequently, manufacturers shifted their essential procurement strategies from aggressive buying to cautious, strictly "as-needed" replenishment, thereby significantly eroding the agricultural demand support for ammonium sulfate.

In addition to the weakening demand from the agricultural sector, the industrial sector has also failed to provide effective price support for the market. Over the past two years, the scope of industrial applications for ammonium sulfate has continued to expand, with demand in sectors such as rare earth extraction, lithium battery material recycling, and pharmaceutical synthesis demonstrating strong resilience. However, starting in 2025, influenced by factors such as sluggish end-market demand, operating rates in core downstream industrial sectors—including rare earths and titanium dioxide—are expected to continue their decline. This will lead to a marked reduction in ammonium sulfate procurement volumes, causing the potential for incremental growth in industrial demand to narrow steadily. As a vital component of the domestic market, if industrial demand fails to stabilize and achieve a turnaround, it will continue to exert downward pressure on the ammonium sulfate market in the period ahead.

Slowing Export Orders; Weakening Support from International Markets

my country stands as the world's largest producer and exporter of ammonium sulfate. This year, driven by geopolitical conflicts in the Middle East, India experienced a concentrated surge in demand for nitrogen fertilizers. This surge boosted both the volume and pricing of international ammonium sulfate, serving as the primary external catalyst behind the recent sharp rally in domestic ammonium sulfate market prices.

However, entering May, the international nitrogen fertilizer market began to return to rationality; international urea prices retreated from their highs, bearish sentiment among overseas buyers spread rapidly, and the supportive influence from international markets on ammonium sulfate prices has now weakened significantly. Recent international tender results clearly indicate a distinct downward trend in the ammonium sulfate market. Specifically, the ex-factory cost for high-purity ammonium sulfate has fallen to approximately 1,700 RMB per ton—creating a significant price inversion relative to current domestic spot prices. Consequently, profit margins on export trade have been severely squeezed, with some exporters even finding themselves in an unprofitable position.

Zhang Yi, an ammonium sulfate trader based in Shandong, noted that actual transaction data from overseas markets reveals a minimum acceptance price of $245 per ton (CFR) for granular ammonium sulfate in Brazil. When converted to a domestic port-of-arrival cost, this amounts to only 1,480 RMB—a figure already lower than the current domestic spot price for coking-grade ammonium sulfate. This suggests that there remains further room for downward price adjustments in the domestic ammonium sulfate market.

Furthermore, market rumors regarding potential adjustments to ammonium sulfate import and export policies have emerged as a key bearish factor weighing on industry confidence. Should these policies be formally implemented, the customs clearance process for ammonium sulfate exports could become more protracted; simultaneously, customs clearance fees and testing costs would likely rise, while export efficiency would decline. These factors would directly constrain enterprises' capacity to accept export orders, thereby exerting further downward pressure on domestic spot prices for ammonium sulfate. Current market sentiment, characterized by a "wait-and-see" attitude, is heavily influenced by expectations regarding relevant policies.

Anticipated Supply Growth: Supply-Demand Balance Shifts Toward Looseness

While demand continues to weaken, the supply side of the ammonium sulfate market is exhibiting a trend of steady growth. The previously tight supply-demand equilibrium has been thoroughly disrupted—a fundamental factor behind the market's recent peak and subsequent decline.

Currently, the operating rate within the domestic coking industry stands at 76.06%. Monthly output of coking-grade ammonium sulfate remains stable at approximately 440,000 tons—a year-on-year increase of 4%—ensuring an ample supply of basic-grade material. Meanwhile, the caprolactam industry maintains an operating rate of around 73%; output of high-purity ammonium sulfate shows minimal fluctuation, ensuring a stable supply of high-end material.

A point of caution is that June will see a concentrated release of new capacity within the domestic coal chemical industry, which is expected to further boost the overall supply of ammonium sulfate. For instance, the Datang Fuxin Coal-to-Natural Gas Project is poised to enter its commissioning and trial production phase. Once operational, this project will bring new ammonium sulfate capacity online; combined with the coking industry maintaining high operating rates, the overall domestic supply of ammonium sulfate is projected to continue its upward trajectory in the coming period. In stark contrast, domestic demand—across both the agricultural and industrial sectors—is simultaneously weakening. Furthermore, overseas export orders have slowed, and profit margins have inverted (becoming negative). Consequently, the supply-demand landscape for ammonium sulfate has shifted from a tight equilibrium to a state of oversupply; a return to a phase of volatile consolidation has become an inevitable market trend.

Additionally, from an inventory perspective, market pressure on ammonium sulfate continues to mount. As of May 14, aggregate sample inventories of ammonium sulfate at key domestic ports reached 820,000 tons—a substantial increase of 70,000 tons compared to the previous week. The persistent accumulation of port inventories—coupled with the inability to efficiently clear incoming shipments—will directly exert downward pressure on the domestic spot market, serving as a significant catalyst for further price declines in ammonium sulfate.

Industry analysts suggest that, after weighing various factors—including current supply-demand dynamics, foreign trade conditions, policy expectations, and inventory pressures—the era of unilateral, rapid price surges for ammonium sulfate has essentially concluded. The market has officially entered a phase characterized by a tug-of-war between bullish and bearish forces, necessitating a period of rational consolidation. Looking ahead, prices for high-end ammonium sulfate are expected to face further downside risk, leading to a continued narrowing of the price spread between high-end and low-end product grades.

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