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: 1.3-1.7mn t, roughly one-third the size of the first round, and still sitting in front of customs for approval.

The standard price did not move. China standard caprolactam-grade held at $215-220/t fob, $5 firmer at the low end on the week. Anyone reading only that line would conclude the allocation changed nothing.

It changed one thing, and it is the thing that decides who pays for freight in the first quarter: the split. Market participants suggest compactors may receive around 40pc or less of the total. No document confirms it. But if it is right, then the tonnage that reaches Brazil as compacted material is smaller than the headline suggests, and Brazil is the destination that pays the highest premium for compaction in the world.

A compacted tonne and a standard tonne are not the same product in the same market. The allocation is issued in tonnes. The demand is in grades.

What actually printed this week

Four transactions, and they do not point the same way.

Guangxi Hengyi sold standard caprolactam-grade at $220/t fob for 10-30 November shipment. That is the top of the assessed range and it is a real cargo with a real window, not an offer.

Some suppliers raised standard indications to $225/t fob and above, citing tighter export availability. Others stopped offering altogether. Highsun and Fujian Tianchen did not launch new sales tenders this week — a producer who expects a better price next week does not run a tender this 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. The assessed range is $225-240/t. That is a $15/t spread inside a single grade on a single day, which is not a market finding its level — it is a market where nobody is certain what they are allowed to ship.

Then the outlier: 10,000t of MMA-grade sold at $173/t fob for December shipment to southeast Asia.

The $173 print is the most useful number of the week

MMA-grade is not standard grade. It has a narrower buyer list, a different specification and a thinner market. It would be a mistake to read $173/t as a discount on $215-220/t.

Read it as the floor. It is the price at which a seller with material that had to move found a buyer in southeast Asia, in a week when Vietnamese and Thai buyers were specifically asking for MMA-grade rather than caprolactam-grade. That is the cheapest ammonium sulfate nitrogen available for export from China today, and it is $42-47/t below the standard print.

Two things follow. First, the standard market is not distressed — a distressed market converges on the floor, and this one is holding $42 above it. Second, if the allocation split pushes more standard tonnes into the export pool than the market expects, the first place that shows up is not the standard price. It is the spread between standard and MMA, as sellers compete for the same short list of southeast Asian buyers.

The domestic ladder says sellers are comfortable

The reason the standard price can hold at $215-220 while a second allocation lands is visible in the domestic numbers.

Shandong caprolactam-grade at ¥1,240/t ex-works equates to roughly $203/t fob. The export price is $215-220/t. The gap is $12-17/t.

That is not a large enough premium to make a Chinese seller desperate to export, and it is not small enough to make exporting pointless. It is the exact width of gap that produces the behaviour we are seeing: sellers take allocation, ship what is already committed, and wait. Domestic caprolactam-grade prices actually rose this week, driven by 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 does not need to chase a Brazilian bid. That is the mechanism behind a flat price on a bullish headline.

Brazil: covered, spread out, and not chasing

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 it. October arrivals totalled 488,000t. 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: 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.

A spread that wide inside one country is not a pricing disagreement. It is uncertainty being priced by geography. Buyers who can wait are waiting; buyers who cannot are paying $270.

Brazilian buyers also have two local reasons to sit still this week: elections and currency volatility. Neither is a phosphate-market story. Both slow a purchase order.

London put a date on 6pc

The UK is removing import duties on fertilizers — ammonium sulphate included — from 26 November 2026 until 31 December 2027. The affected list runs urea, amsul, NPKs, DAP, MAP, NP and PK. AN and CAN are not on it. Duties on Russian and Belarusian origin remain.

Current UK duty on these products is 6-6.5pc. On a 200t parcel at $215/t that is $2,580-2,800 that stops being payable. On 1,000t it is $12,900-14,000.

This changes nothing about fob. It changes everything about which cargo a UK buyer wants, because the relief is dated. A cargo clearing customs on 25 November pays the duty; the same cargo clearing on 27 November does not. For a UK 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 and useful: do not discount to win a pre-26 November UK cargo. The buyer’s incentive is to wait, and the seller’s price does not need to compensate for a duty that is about to disappear.

Europe is the reason standard did not fall

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

The driver is not ammonium sulfate. It is gas. Dutch TTF front-month peaked at €100.72/MWh on Wednesday before easing to €98.34/MWh, and the northwest European urea production cost 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; 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 European buyer is not buying ammonium sulfate. They are buying a nitrogen unit that is not exposed to TTF.

The UK tariff removal lands in the same week as this. A UK buyer gets a 6-6.5pc duty relief and a European supplier base that is withdrawing offers. Both push the same way, and neither is about Chinese supply.

The premium that caps the rally

One number constrains how far this market can run.

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. Last week it was about 40pc. The gap widened even as the amsul price softened, because urea’s netback rose at the same time.

A compound fertilizer producer or a blender can substitute nitrogen between the two products. At a 42pc premium the incentive to substitute is not theoretical — it is the first thing a procurement manager checks. Ammonium sulfate’s sulfur value and its physical handling advantages justify a premium; they do not justify an unlimited one.

So the structure of this market is: supply tightness and allocation uncertainty holding the price up, substitution pressure capping how far it can go, and a European gas market deciding how much of the upside is real. Tight does not mean higher from here. It means the downside is cushioned and the upside needs a new reason.

What to watch

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

Whether $220/t holds as a ceiling or a floor. Hengyi printed $220 for a 10-30 November window. A second cargo at $220 confirms the level. A cargo at $225 confirms the sellers’ thesis. A cargo at $210 tells you the allocation validity window is doing the work that the price could not.

Brazil’s December line-up. October at 488,000t and November at 378,000t means the 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. A tariff removal nobody buys against is a press release. If UK buyers pull tonnage forward to clear after the date, the effect shows up in European fob first, not in Chinese fob.

The Central American tender closing 3 November for 12,000t of compacted caprolactam or granular grade, shipment 20 November to 10 December. It is a real parcel with a real window in the one grade where supply is genuinely uncertain. It will print a number, not an offer.

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.