For the Quarter Ending June 2023
North America
The prices of Ammonia showed a downward trajectory throughout Q2. The prices declined by 17.9% in April 2023, 12.9% in May 2023, and 12.8% in June 2023. The key driving factor behind the declining trend of Ammonia in the USA was diminished demand from domestic and international markets. The Ammonia market was mostly oversupplied, coupled with low procurement orders from the end-user market, paving the way for narrowed demand-supply gap. Further, declining demand for Diammonium Phosphate, Ammonium Sulphate, and Mono Ammonium Phosphate fertilizers also supported the price trend. Additionally, imports to other countries like Mexico and Chile remained low during this quarter as the water level in the Mississippi River declined due to heat. As per data from the Federal Reserve of Economic Data, the Consumer Price Index rose from 302.91 in April 2023 to 303.29 in May 2023. However, fluctuations in prices of upstream Natural Gas and Crude Oil may affect the production rate in the country, leading to increased product prices in the coming months.
APAC
Prices of the Ammonia in the APAC region have showcased pessimistic market sentiments throughout the second quarter of 2023 due to declining feedstock Thermal Coal prices in China and low demand from the downstream nitrogenous fertilizer industry. For the three months ending in June 2023, Anhydrous Ammonia FOB Qingdao prices declined by 13.6%. It was observed that China reduced its exports at the start of June 2023 by 0.4%, creating oversupplies in the domestic market. Stockpiled inventories coupled with diminished demand paved the way for a narrow gap between demand and supply, consequently affecting the prices. Further, declining demand for downstream derivative Urea, Ammonium Sulphate, Nitric Acid, and Ammonium Nitrate supported the prevailing price trend. However, as per data from the National Bureau of Statistics (China), the country's Consumer Price Index was recorded at 100.1 in April 2023 and 100.2 in May 2023. Further, the industrial growth rate was recorded at 5.6 in April 2023 and 3.5 in May 2023.
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Europe
Similarly to the global market trend, the prices of Ammonia showcased a downward trajectory in European countries in the second quarter of 2023. The declining price of feedstock Natural Gas and low demand from the international markets remained the key driving factors behind the declining price trend. Further, a blast in the pipeline, which was used to transport Ammonia from Russia to other countries via Ukraine, led to surplus availability of Ammonia in the market coupled with diminished demand paving the way for a narrow demand-supply gap and consequently leading to a decline in prices. The prices fell by 23.6% in Russia in the second quarter. In the Netherlands and the United Kingdom, heavy rainfall in May led to a delayed farming season in the area and low procurement orders from the agricultural sector, supporting the prevailing price trend. The prices fall in the Netherlands by 18.4% and by 18.3% in the USA from April to June. As indicated by Eurostat, the Industrial Production Index was 96.5 in April 2023.
South America
Considering the current prevailing market dynamics, it is observed that the prices of Ammonia showed a declining trend in the second quarter of 2023 in Brazil. The prices declined by a margin of 9.5% from April to June in Brazil. The decrease in Ammonia and feedstock material Natural Gas prices in the exporting country Saudi Arabia eased freight charges, and low procurement orders from the downstream fertilizer industry supported the current prevailing price trend. Further, diminished demand for downstream derivative Urea in the country also supported the trend. Additionally, it is observed that the purchase activity of fertilizer is significantly delayed in this quarter, with a decrease of 16% by the end of May 2023; as we approach the end of the second quarter, it is observed that only 44% of the total product has been sold and the demand-supply gap is narrowing. However, in the coming months, future market sentiments suggest a potential shift towards an incline in prices on the back of increased feedstock prices in exporting country Saudi Arabia and increased freight charges.
Middle East
Similar to the global market trend, Ammonia prices showcased a downward trajectory in Saudi Arabia in the second quarter of 2023. The prices declined by 29.7% from April to June this year on the back of weak demand from the Nitrogenous fertilizer industry and declining prices of feedstock Natural Gas during this quarter. Additionally, it was observed that due to cheap shipments from the Russian Federation via the black sea to importing countries like India and Brazil, market participants of Saudi Arabia were forced to keep their prices low from April to June. The depreciating demand dynamics of the material in the market and ample material availability have paved the way for a narrow gap between demand and supply. However, Saudi Arabia's Investment and an Omani firm have signed a memorandum agreement of understanding to establish a fertilizer plant in the Kingdom to boost its agricultural production. The depreciating demand dynamics of the material in the market and ample material availability have paved the way for a narrow gap between demand and supply.
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