China’s Ammonium Sulfate Market Still Promising in 2016

China’s ammonium sulfate market was quite sound in 2015. The average price was up 28% YoY, influenced by three main factors.
1. Reduced output: Coking is one of China’s major sources for ammonium sulfate – as a byproduct. Due to slackness in the iron/steel sector in recent years, the demand for coke is down, coking enterprises are struggling to survive, producing less coke and hence less ammonium sulfate, so the price has increased.
2. Increased demand: Ammonium sulfate is a raw material for compound fertilizers. China’s planting areas for vegetables, fruits and other crops have been expanding, so the demand for sulfur-based compound fertilizers increases constantly, driving up the demand for ammonium sulfate.
3. Drastic export growth: Because ammonium sulfate is a byproduct of desulfurization, its export tariff is zero. China exported 5.25 million tons in 2015, up 26.36% from the previous year, and an all-time high, according to customs statistics. The export price also increased, averaging US$132.44/t for the year, an increase of 4.68% over the previous year.
The ammonium sulfate market is still promising in 2016. As coking enterprises cope with the growing urgency of environmental protection and the decline in China’s iron/steel capacity, declining ammonium sulfate output from this sector is inevitable. The export of ammonium sulfate will also remain high. The market performance of ammonium sulfate is expected to be stronger than the average for chemical fertilizer products, but growth will not be dramatic.

Ammonium sulfate output is expected to increase in 2016

In today’s China, most ammonium sulfate is produced as a byproduct in various sectors – coking, coal-fired power generation and the manufacture of caprolactam, cyanuric acid and other chemicals. The total capacity is 12.50 million t/a.
Before 2012, most ammonium sulfate came from the coking sector. Coking, caprolactam and other sectors, respectively, produced roughly 52%, 30% and 18%. More recently, a large number of desulfurization units have been constructed in coal-fired power plants and chemical plants. This year, coking-related output is down, caprolactam-related output has also slowed down, and output from desulfurization in coal-fired power generation and chemical production is increasing rapidly. Total annual output is believed to be growing.
Coking-byproduct ammonium sulfate: Coke output was lower in 2015 than in the previous year. Demand for coke in the iron/steel sector has weakened. The coking sector is also under considerable pressure to better protect the environment. Output of ammonium sulfate from this sector will keep declining.
Caprolactam-byproduct ammonium sulfate: China’s caprolactam capacity has increased drastically in recent years, as has output. With this increase, the price difference between caprolactam-byproduct ammonium sulfate and coking-byproduct ammonium sulfate has narrowed. For a long time in the past, the difference was on the order of RMB200/t. Today, it is only RMB20-40/t or even zero. Caprolactam capacity is expected to reach 4.21 million t/a this year, and the output of byproduct ammonium sulfate can reach 6.0 million tons.
Desulfurization-byproduct ammonium sulfate: With intensifying environmental protection, the output of ammonium sulfate as a byproduct of desulfurization in power plants and other sectors will increase rapidly.
This year, China is still exporting a great deal of ammonium sulfate – the volume is hoped to exceed 5.50 million tons.
The amount of ammonium sulfate used in China today is only around 1% of the amount of nitrogen fertilizers used. China uses ammonium sulfate mainly in agriculture, in the form of compound fertilizers. As the planting areas for cash crops such as vegetables and fruits expand constantly, consumption of sulfur-based compound fertilizers will keep increasing, and demand for ammonium sulfate will surely grow.  

Table 1  China’s export of ammonium sulfate, 2014-2015

    Export volume (kt)     Export price (US$/t)
    2015    2014    YoY growth (%)    2015    2014    YoY growth
(%)
Total    5 254.7    4 158.6    26.36    132.44    126.52    4.68