Source: Bing

Analysis and prospect on supply

Up to the end of 2015, the nitric acid capacity in China was 4.3 million t/a, with the output of 2.798 million tonnes in 2015, down 4% YoY. The import volume of nitric acid was 41,000 tonnes; export volume, 10,000 tonnes; and apparent consumption, 2.8 million tonnes, with the CAGR of 3.5% in 2010-2015.

The location of concentrated nitric acid was almost the same as what it was 10 years ago. The output of concentrated nitric acid in Anhui, Jiangsu, Shandong, Henan and Zhejiang ranked top in China, with the altogether concentrated nitric acid capacity in the above five provinces accounting for over 70% of the total capacity in China.

Due to too many similar products in the downstream market and over expansion on the capacity, the market demand became saturated with overcapacity, overstocking of the products. Some enterprises were even forced to suspend some under construction projects, which brought loss for the enterprises.

It is predicted that the nitric acid capacity would reach 4.5 million t/a in 2017, with the CAGR of 3.7% in 2012-2017.

Analysis and prospect on demand

In 2015, the nitric acid output was 2.768 million tonnes, down 4% YoY. The apparent consumption of nitric acid reached 2.8 million tonnes with the CAGR of 3.5% in 2010-2015.

Nitric acid is one of the most important products in basic chemical industry, which is widely applied in chemicals, metallurgy, medicine, dye and pesticides industries. As for the consumption structure of concentrated nitric acid in China, about 64% of the concentrated nitric acid was consumed in chemical industry; about 20%, in metallurgy industry; about 6%, in medicine industry; and about 10% in other industries.

It is predicted that the nitric acid consumption would reach 3 million tonnes in 2017. The beneficial governmental policies would support the demand in nitric acid market and the output in the downstream market would be stable.

Analysis and prospect on import and export

The import and export volume of concentrated nitric acid was not much in China due to its specialty in transportation. China is a net import country in concentrated nitric acid, with the import dependence rate of only 1.5% in 2015.

The import volume of nitric acid was 41,000 tonnes in 2015, down 27.9% YoY, with the import value of USD10.643 million, down 22.7% YoY. The export volume was 9,000 tonnes in 2015, down 1.7% YoY, with the export value of USD4.493 million, down 20.2% YoY.

Nitric acid is imported in China through general trade, with the trading volume of 40,000 tonnes, accounting for 98.5% of the total import volume. Nitric acid is mainly imported from South Korea (96.4%), Taiwan China (3.2%) and Japan (0.2%). Shanghai imported the most nitric acid in China, accounting for 96% of the total import volume, followed by Jiangsu (3%) and Anhui (0.8%).

In 2015, China only exported 9,000 tonnes of nitric acid.

Statistic of nitric acid consumption in 2012-2015 (Unit: ten thousand tonnes, %)

Statistic of nitric acid import and export in 2012-2015 (Unit: ten thousand tonnes, billion USD)

Analysis and prospect on market price

The nitric acid market price showed a slight fluctuation in China 2015. Take the market price in Anhui as an example, the highest nitric acid price of RMB1,250/t appeared in June to Aug. and the lowest price of RMB950/t showed up in Sep. The average price in 2015 was RMB1,118/t, with RMB132/t up most and RMB168/t down most.

In the past few years, the overcapacity in the industry, low price of raw materials and declining product prices have kept bothering the development of the nitric acid industry. In addition, the Tianjin explosion happened in Aug. 12 in 2015 has shadowed the industry because the Chinese government is putting pressure on the inspection on nitric acid and its downstream hazardous chemicals. Currently, the nitric acid industry is facing four difficulties in its development.

First, it is the overcapacity. Up to the end of 2015, the nitric acid capacity in China was 4.3 million t/a. Due to too many similar products in the downstream market and over expansion on the capacity, the market demand became saturated with overcapacity, overstocking of the products. Some enterprises were even forced to suspend some under construction projects, which brought loss for the enterprises.

Second, it is hard to raise quotation. The overcapacity resulted in price wars among all the enterprises. The expanding capacity has caused low price of nitric acid. Especially in hot seasons, due to the maintenance or suspension of its downstream ammonium nitrate producers, some manufacturers would reduce its profits to capture the market.

Third, weak demand due to strict inspection. Ammonium nitrate, which takes up 47% of the total consumption in nitric acid, is mainly used to produce explosive. After the explosion in Tianjin last year, some manufacturers suspended their production on ammonium nitrate. The downstream enterprises were also very cautious in purchasing ammonium nitrate.

Forth, weak support from raw material. The declining prices of both coal and natural gas are not able to support the product prices.

*The article is edited and translated by CCM. The original one comes from Economic Analysis of China Petroleum and Chemical Industry.

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