New Chinese Caprolactam capacity to shake up global ammonium sulphate market - Integer
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New Chinese Caprolactam capacity to shake up global ammonium sulphate market

Posted On: 11-12-2013 By: Ali Asaadi

International AS trade flows are set to reverse as new product from China begins to flow from East to West in the coming years (Integer Research Press Release)

Europe, the US and the former Soviet Union have been the primary centres of AS production in recent decades, but this is quickly changing, according to a new study on the Ammonium Sulphate market from Integer Research. “Most AS is produced as a by-product from the caprolactam industry and Chinese caprolactam production has expanded rapidly since 2010. This is set to continue in 2014 and beyond and the dynamics of the AS industry will increasingly be defined by developments in East Asia. This is a key factor we analyse in our AS study” explained Oliver Hatfield, Integer’s Director of Fertilizers.

We will see an expansion of 15% in AS capacity in East Asia between 2012 and 2014 and expect more beyond that. Demand will grow in China but slower than production, leading to large volumes of Chinese product entering the global export market” adds Mr Hatfield.

To some extent growth in AS production in China will be balanced by the lower AS production rates from the more modern caprolactam technology used there and because caprolactam producers elsewhere will reduce caprolactam/AS utilization rates as they lose market share.

Integer expects AS trade to begin flowing from east to west in greater quantities in the coming years, whereas the predominant tradeflow has been from west to east – mostly from the Black Sea to South East Asia. “The future of the global AS market will be characterised by which markets Chinese product is sold into and in what quantities. This is an important theme that Integer Research has been looking at in our new Outlook for Ammonium Sulphate study” explains Oliver. This in turn will greatly depend on Chinese AS product quality and the extent to which AS is priced on its nitrogen and sulphur content.

We have been looking at the differing achieved prices of producers depending on the grades they produce and the markets that they sell to, and whether Chinese production could impact these” says Oliver Hatfield. “Premiums are key to understanding the market. We expect production of premium grades to increase, although demand will also increase as developing markets increasingly use mechanical application and blended fertilizers.

The global balance in the production of upgraded AS product will be paramount to the future of the industry. In 2012, Rentech Nitrogen brought 575,000 tpy of granular ammonium sulphate online in Pasadena, Texas, and is planning an expansion of capacity through debottlenecking in 2015. As this shows, current grade premiums make production of upgraded AS an attractive business in some areas.