[Domestic News] Export of ammonium sulfate: Small nitrogen fertilizer has a big world.

Introduction: Ammonium sulfate is an environmentally friendly byproduct of desulfurization and denitrification processes used by chemical and coal chemical industries, as well as the neutralization of excess synthesized ammonia. It is mainly supplied by coking enterprises and caprolactam enterprises. On the one hand, due to its status as a byproduct, and on the other hand, due to its relatively low nitrogen content and lower supply compared to urea, it is known as a "small nitrogen fertilizer" product in the industry. Its domestic demand is limited, with a consumption of 2.3 million tons in 2022, which is relatively small compared to other types of fertilizers. However, in the international market, the export volume of ammonium sulfate has increased from 2.92 million tons 10 years ago to 12.44 million tons in 2022, an increase of more than 4 times. Its influence and market share in the international fertilizer market have been increasing year by year, showing its unique brilliance in this global market.

The continuous increase of ammonium sulfate export volume in the past 10 years

According to data from the General Administration of Customs of the People's Republic of China, the overall export volume of ammonium sulfate has shown a year-on-year increase from 2013 to 2022, with a compounded annual growth rate of 12.7% in the past 5 years. Among them, in 2017, the export volume of ammonium sulfate reached 5.84 million tons, making it the number one nitrogen fertilizer product in terms of export volume. In 2019, it reached 7.02 million tons, becoming the number one fertilizer product in terms of export volume. In 2022, the export volume broke through the 10 million ton mark, reaching a new high of 10.65 million tons, an increase of 23.0%. In the same year, it increased by another 1.79 million tons to around 12.44 million tons, with a year-on-year growth rate expected to be around 16.8%. Brazil is the largest trading partner of China's ammonium sulfate, with a volume of 3.739 million tons exported to Brazil in 2022, accounting for 30.1% of the total export volume. In addition, Vietnam, Turkey, Malaysia, and Myanmar, among other countries, have seen a significant increase in their purchases, which is an important factor driving the increase in ammonium sulfate exports. In addition, there has been a noticeable increase in purchases from India, Mexico, Italy, Germany, and other countries. The main reasons for the continuous increase in China's ammonium sulfate exports are the increased demand for fertilizers in Latin America and Southeast Asia, as well as a decrease in supply from other major producing regions in the international market. The continuous increase in China's ammonium sulfate production capacity and output has also brought about an increase in supply.

According to data from Zhuo Chuang Information, the compound annual growth rate of ammonium sulfate exports is expected to be 12.7% from 2018 to 2022. The full-year export volume in 2022 is expected to be 12.44 million tons, a year-on-year increase of 16.8%. From a supply and demand perspective, firstly, the international market's supply of fertilizer is decreasing this year, and many places are experiencing a shortage of fertilizer, leading to an increased demand for ammonium sulfate from China. This provides some support for China's ammonium sulfate exports. Secondly, the demand for ammonium sulfate squeezed granules in Latin American countries such as Brazil has increased, and China's supply of goods has increased its international competitiveness, leading to a corresponding increase in exports. Thirdly, the quality of China's ammonium sulfate has improved, and many places in the international market have increased their recognition of ammonium sulfate and ammonium sulfate squeezed granules. Fourthly, China's ammonium sulfate exports have always maintained a green channel, which is favorable for export execution. In the short to medium term, the demand for fertilizer in the international market may be stable or slightly increasing, and there is still room for growth in ammonium sulfate exports.

Looking at the monthly export data for 2022, the export volume has exceeded 900,000 tons for seven months, continuously refreshing the record for the highest monthly export volume. The peak in September saw an export volume of 1.759 million tons. The monthly average export volume for 2022 reached 1.037 million tons, an increase of about 149,000 tons compared to the average for 2021. The quarterly export volume is equivalent to the annual export volume level from ten years ago.

In terms of the export structure of ammonium sulfate in 2022, the export volume is expected to reach a new high. The main reasons for this are the increased demand for fertilizer in Latin America and Southeast Asia, as well as the decreased supply from other major producing areas in the international market. The sustained increase in China's ammonium sulfate production capacity and output has led to an increase in supply. China's source of goods is still mainly concentrated in enterprises along the coastal areas of North China and East China. Trading partners are still mainly concentrated in Latin America and Southeast Asia. There is a certain increase in demand in Europe, Africa and other regions this year, and general trade is still the main way of conducting business.

According to the chart above, the key countries for export sales of ammonium sulfate in 2022 are Brazil, Vietnam, Turkey, Malaysia, Myanmar, and Indonesia. Brazil has the largest trade volume of 3.739 million tons, a year-on-year increase of 4.6%, with the largest contribution to export volume in the second half of the year. Turkey's trade volume continues to increase, reaching 1.047 million tons, a year-on-year increase of 99.94% (Turkey's shipment volume in 2021 was 524,000 tons, a year-on-year increase of 246.4%). Vietnam's trade volume is 915,000 tons, a year-on-year decrease of 21.0%. Myanmar's procurement volume is 915,000 tons, a year-on-year increase of 41.27%, with exports mainly concentrated in the fourth quarter. Malaysia's trade volume is 604,000 tons, a year-on-year decrease of 11.7%, and Indonesia's trade volume is 579,000 tons, a year-on-year decrease of 49.3%. In addition, the procurement volume in other regions has increased, especially with the stable output of ammonium sulfate from China, which has eased the demand pressure for fertilizers in many international markets.

Brazil is the fastest-growing partner in cooperation over the past decade. Looking at the past 10 years of exporting to the Brazilian market, the total export volume to Brazil in 10 years is 15.45 million tons. China's exports to Brazil were 96,000 tons in 2013, and increased to 3.739 million tons in 2022, an increase of as much as 3,794.79%.

In 2022, the main registered locations for ammonium sulfate export enterprises are provinces such as Fujian, Yunnan, Shandong, Jiangsu, Zhejiang, and Hebei. Among them, Fujian Province has the largest trade volume of 2.097 million tons, a slight decrease of 4.9% year-on-year. The main reason for the largest export volume is the stable operation of three large-capacity caprolactam enterprises in Fujian and some capacity expansion, as well as the geographical advantage provided for export. Yunnan's trade volume is 1.863 million tons, a year-on-year increase of 95.3%, driven by an increase in some sources of supply from Myanmar. Jiangsu's trade volume is 1.255 million tons, a year-on-year decrease of 22.6%. Hebei Province's trade volume is 1.129 million tons, a year-on-year increase of 61.8%. The main reasons for the top six provinces in export volume in Hebei and Shandong are the squeezing of granule production and a significant increase in export volume this year. From the above chart, it can be seen that the main registered locations for ammonium sulfate export enterprises are mostly provinces with a large supply of caprolactam and located in the eastern coastal areas. The export volume in the eastern region accounts for more than half of the national export volume, reflecting the supply situation of the main export sources of ammonium sulfate.

Prior to 2015, the main provinces for ammonium sulfate exports were Hebei, Tianjin, and Zhejiang, with annual export volumes of less than 100,000 tons per province. Starting in 2018, the top three exporting provinces exceeded one million tons, and the provinces with larger export volumes shifted to eastern provinces such as Jiangsu, Shandong, and Zhejiang. In 2022, the number of provinces exporting more than one million tons increased to six, namely Fujian, Yunnan, Shandong, Jiangsu, Zhejiang, and Hebei. The province with the highest export volume was Fujian, with 2.097 million tons, and there was no clear export volume data disclosed prior to 2015.

In 2022, the main trade mode for ammonium sulfate exports was general trade, with a quantity of 11.995 million tons, accounting for 96.4% of the total trade volume, with a year-on-year increase of 19.0%. Border small-scale trade accounted for only 280,000 tons, representing 2.2% of the total volume, with a year-on-year decrease of approximately 25.0%. In addition, the amount of logistics goods received in customs special supervision areas increased by approximately 18.0% to 121,000 tons. The volume of transactions through other trade modes was negligible.

3 Ammonium Sulfate

In recent years, the export of ammonium sulfate has increased year by year, mainly due to the release of ammonium sulfate production capacity such as caprolactam devices, zero tariffs on exports, the cancellation of export inspections by customs in 2018, no increase in technical inspections from 2021 to 2022, tight supply in the international fertilizer market, and increased demand for fertilizers in Brazil and other regions.

The release of caprolactam production capacity in China has resulted in a large supply of ammonium sulfate. From 2018 to 2022, the production capacity of ammonium sulfate has steadily increased, especially for caprolactam grade products, which have stable quality, large output, and are mainly located in coastal areas such as East China, making them more conducive to export. In addition, the large supply of goods in China has led to lower prices, which is also conducive to the purchase of ammonium sulfate in Southeast Asian countries. The production capacity of caprolactam grade ammonium sulfate has increased rapidly, with only 750,000 tons in 2013, and an increase of 8.08 million tons from 2022 to 8.83 million tons, an increase of 1,077.33% in 10 years.

Zero tariffs on exports are conducive to the export of ammonium sulfate. Ammonium sulfate, as a by-product of chemical and coal chemical industries, is encouraged by the state to be exported, and zero tariffs on exports have been implemented since 2008. Export inspections were canceled in 2018. The cancellation of export inspections simplifies export procedures and saves commission costs for enterprises that previously commissioned inspections. Starting from October 15, 2021, customs has increased the customs supervision conditions "B" for 29 10-digit customs commodity codes related to exported fertilizers, and customs inspection is implemented for relevant products, but not including ammonium sulfate (31022100).

The demand for ammonium sulfate in the international market has increased, mainly due to the increase in demand for compressed particles, especially in Latin America and Southeast Asia. In the international market, demand for compressed products such as ammonium sulfate has steadily increased in Latin America and other regions, particularly in Brazil, where demand for compressed ammonium sulfate particles continues to grow, injecting vitality into the market. Over 70% of ammonium sulfate exports to Brazil are in the form of compressed particles.

The international market supply is insufficient, with some caprolactam devices in Northwest Europe and the United States operating unstably and reducing output from 2022 to 2023. In addition, demand for purchases in surrounding countries such as Northwest Europe, the Baltic Sea, and the Black Sea has increased, but exportable sources are limited, indirectly benefiting Chinese ammonium sulfate exports.

4 Ammonium Sulfate Export Forecast Analysis

In January 2023, China's ammonium sulfate exports were 896,800 tons, a decrease of 23.33% compared to the previous month and a decrease of 6.35% compared to the same period last year. In February 2023, China's ammonium sulfate exports were 887,300 tons, a decrease of 1.06% compared to the previous month and an increase of 38.50% compared to the same period last year. The cumulative export volume was 1,784,100 tons, an increase of 11.63% compared to the same period last year.

The continuous expansion of the ammonium sulfate export market is due to the increase in domestic supply and the favorable push from the contraction of international supply and the expansion of demand. The ammonium sulfate export industry chain is also constantly improving, including but not limited to the increase in export types, the diversity of export forms, the improvement of port logistics and transportation efficiency, and the gradual maturity of ammonium sulfate processing product operations. On the international stage, ammonium sulfate continues to expand its advantages of high quality and low price. Although the international nitrogen fertilizer market is weak, the driving force for the increase in ammonium sulfate exports remains unabated. Even in the case of weak demand in the international market, China still has a monthly export volume of over 800,000 tons. In addition, some internal imide equipment has exited the international market, and Mexico has maintained its status of not imposing anti-dumping duties on Chinese ammonium sulfate, which is a positive factor for China's ammonium sulfate exports. Therefore, Zhuochuang Information expects that China's ammonium sulfate will continue to shine in the international market in 2023, and the expected export volume still has room for growth.

Source: Zhuo Chuang ConsultingClick to view