Ammonium sulfate, 29 October 2026: the second allocation finally has a tonnage, and the compactor share is the number that decides Brazil

Last week the second Chinese export allocation was a rumour with a shape; this week it has a number, estimated at 1.3-1.7mn t, roughly one-third the size of the first round, and still sitting in front of customs for approval. China standard caprolactam-grade held at $215-220/t fob, $5 firmer at the low end on the week. Traders caution against reading that flat print as evidence the allocation changed nothing.

What changed is the split, the detail that decides who pays for freight in the first quarter. Market participants suggest compactors may receive around 40pc or less of the total, though no document confirms it; if that holds, the tonnage reaching Brazil as compacted material is smaller than the headline suggests, and Brazil pays the highest premium for compaction in the world. The allocation is issued in tonnes while demand is in grades, so a compacted tonne and a standard tonne are not interchangeable in the same market.

Confirmed trades

Four transactions were reported this week and they do not point the same way. Guangxi Hengyi sold standard caprolactam-grade at $220/t fob for 10-30 November shipment, the top of the assessed range and a real cargo with a real window rather than an offer. Some suppliers raised standard indications to $225/t fob and above on tighter export availability while others stopped offering altogether, and Highsun and Fujian Tianchen did not launch new sales tenders, which traders read as a decision to wait for a better price next week.

On the compacted side, deals were heard in the mid-$220s to the low-to-mid $230s/t fob with some suppliers holding firm at $240/t fob, against an assessed range of $225-240/t. That is a $15/t spread inside a single grade on a single day. Traders describe it as a market where nobody is certain what they are allowed to ship rather than one finding its level.

The outlier this week was a sale of 10,000t of MMA-grade at $173/t fob for December shipment to southeast Asia. It sits well below anything printed in the standard or compacted grades. Traders describe it as a cargo that had to move.

The $173 print

MMA-grade is not standard grade: it has a narrower buyer list, a different specification and a thinner market, so traders say the $173/t print should not be read as a discount on $215-220/t. They describe it as the price a seller accepted to move material into southeast Asia, in a week when Vietnamese and Thai buyers were specifically asking for MMA-grade rather than caprolactam-grade. That makes it the cheapest ammonium sulfate nitrogen available for export from China at the moment, $42-47/t below the standard print.

The standard market is not distressed, since a distressed market converges on the floor and this one is holding $42 above it. If the allocation split pushes more standard tonnes into the export pool than the market expects, traders expect the first visible effect in the spread between standard and MMA rather than in the standard price. Sellers would then be competing for the same short list of southeast Asian buyers.

Domestic price ladder

The reason the standard price can hold at $215-220 while a second allocation lands is visible in the domestic numbers, where Shandong caprolactam-grade at ¥1,240/t ex-works equates to roughly $203/t fob. Against an export price of $215-220/t, that leaves a gap of $12-17/t. Traders describe that gap as too small to make a Chinese seller desperate to export and too wide to make exporting pointless.

Sellers take allocation, ship what is already committed and wait, and domestic caprolactam-grade prices actually rose this week on buying from compactors, so the domestic market is not pushing material toward the port either. A seller who can clear tonnage at home at parity has no need to chase a Brazilian bid. That is the mechanism behind a flat price on a bullish headline.

Brazil demand

Brazil compacted was assessed at $255-265/t cfr, down $2.50 at the midpoint, with the low end falling $5. The line-up explains the softness. October arrivals totalled 488,000t and a further 378,000t is already booked for November — Hong Fu 80,000t to Rio Grande, Ionic Pleione 70,000t to Paranaguá, Asl Canopus 74,000t to Vila do Conde, and a dozen more parcels behind them. Brazil has its first-quarter tonnage on the water before the allocation question is even settled.

Inside that national number sits a $10-15/t spread, with firm offers held at $265-270/t cfr into northern ports such as Santarem, where freight and parcel size work against the buyer, against business reported at $255/t cfr elsewhere. Traders describe a spread that wide inside one country as uncertainty being priced by geography rather than a disagreement over value. Buyers who can wait are waiting, and buyers who cannot are paying $270.

Brazilian buyers also have two local reasons to sit still this week, in elections and currency volatility, neither of which is a phosphate-market story but both of which slow a purchase order. Traders expect that covered position to keep a lid on fresh enquiry through the rest of the month. The result is little urgency to add more tonnage.

The 6pc tariff

The UK is removing import duties on fertilizers, ammonium sulphate included, from 26 November 2026 until 31 December 2027 — a dated relief rather than an open-ended one. The affected list runs urea, amsul, NPKs, DAP, MAP, NP and PK, with AN and CAN not on it and duties on Russian and Belarusian origin remaining. Traders expect the timing to shape booking decisions more than the rate itself.

Current UK duty on these products is 6-6.5pc, so on a 200t parcel at $215/t that is $2,580-2,800 that stops being payable, and on 1,000t it is $12,900-14,000. Nothing changes about fob, but the dated relief changes which cargo a UK buyer wants: a cargo clearing customs on 25 November pays the duty and the same cargo clearing on 27 November does not. For a buyer deciding between a November and a December window, the duty is now the largest single variable in the comparison, larger than a $5/t move in the fob price.

The practical consequence for a Chinese seller is narrow: there is no reason to discount to win a pre-26 November UK cargo. The buyer’s incentive is to wait. The seller’s price does not need to compensate for a duty that is about to disappear, as traders point out.

European nitrogen costs

European ammonium sulfate moved higher this week, with standard around €285/t fob northwest Europe, up into the €290s, on several November-shipment deals concluded inside that range, and granular assessed at €345-370/t fob. Chinese bulk material was offered at €375-380/t fca Lübeck and €365/t fca Ghent. Traders report that the strength comes from the cost side.

Traders attribute the move to gas rather than to ammonium sulfate itself. Dutch TTF front-month peaked at €100.72/MWh on Wednesday before easing to €98.34/MWh, and the northwest European urea production cost was assessed at €767.20/t. AGF Nitrogen, Europe’s second-largest nitrogen producer, withdrew its fertilizer offers across all markets and said it is considering shutdowns in France, Germany, Austria, the Czech Republic and Slovakia; around 5mn t, or 28pc, of European production is now confirmed offline, and a full AGF shutdown would take it past 7.3mn t, or 40pc of ammonia capacity.

That is why a European buyer pays €285 for standard amsul while China offers at $215 — roughly €185 at current rates — and the arbitrage still does not close on a container of standard material: the buyer is paying for a nitrogen unit that is not exposed to TTF rather than for the sulfate molecule. The UK tariff removal lands in the same week, giving a UK buyer a 6-6.5pc duty relief at a moment when the European supplier base is withdrawing offers. Both push the same way, and neither is about Chinese supply.

Nitrogen premium

On published nutrient values, ammonium sulfate nitrogen cfr Brazil is $11.90 per unit N, up from $11.79. Granular urea nitrogen on a Middle East netback is $8.38 per unit N, up from $8.35. That is a premium of roughly 42pc, against about 40pc last week, and the gap widened even as the amsul price softened because urea’s netback rose at the same time. Traders describe that premium as the number constraining how far this market can run.

A compound fertilizer producer or a blender can substitute nitrogen between the two products, and at a 42pc premium the incentive to substitute is the first thing a procurement manager checks rather than a theoretical argument. Ammonium sulfate’s sulfur value and its physical handling advantages justify a premium. They do not justify an unlimited one, as traders are quick to point out.

Supply tightness and allocation uncertainty are holding the price up, substitution pressure is capping how far it can go, and a European gas market is deciding how much of the upside is real. Traders do not read tightness as a reason to expect higher prices from here. They describe the downside as cushioned and the upside as needing a new reason.

What to watch

Everything in the compacted market is waiting on a percentage that has not been published, since the 1.3-1.7mn t estimate is not a document and the customs approval is still pending. If compactors get 40pc, the Brazil cfr number has a reason to firm. At 60pc the $255/t cfr print becomes the reference instead of the exception.

Whether $220/t holds as a ceiling or a floor is the other open question. Hengyi printed $220 for a 10-30 November window. Traders say a second cargo at $220 would confirm the level, a cargo at $225 would confirm the sellers’ thesis, and a cargo at $210 would suggest the allocation validity window is doing the work the price could not.

October at 488,000t and November at 378,000t means the Brazilian requirement is covered into year-end. The question is whether December bookings come in light, because a light December is what turns a covered market into a soft one in January. UK bookings before 26 November are the parallel test: a tariff removal nobody buys against is a press release, but if buyers pull tonnage forward to clear after the date, the effect shows up in European fob first rather than Chinese fob.

The Central American tender closing 3 November, for 12,000t of compacted caprolactam or granular grade with shipment 20 November to 10 December, is a real parcel with a real window in the one grade where supply is genuinely uncertain. Traders expect it to print a number rather than an offer. That makes it the cleanest read on compacted availability before the allocation split is confirmed.

Prices as assessed on 29 October 2026. Market information from our own trading desks and trade sources; figures are indicative and move daily. Terms are quoted per inquiry and confirmed in the sales contract.