Malaysian importers could turn to procuring more ammonium chloride (AC) over standard caprolactam-grade ammonium sulphate (amsul) fertilizers for the rest of 2025 as a cheaper alternative to the latter, according to market participants.
Ammonium chloride is a by-product of the Solvay process where ammonia, CO2, and sodium chloride are combined to produce soda ash. Since AC has a relatively high nitrogen content of around 25pc, it is often used as a substitute for other nitrogen fertilizers such as amsul, which has a lower nitrogen content of 21pc.
AC fertilizers are sold at lower prices compared to amsul, mainly because its chlorine content is highly acidic and could potentially damage the soil upon repeated application. As Malaysian importers are more price-sensitive, they have consistently opted to apply AC to their crops as a cheaper nitrogen source and as an alternative to amsul. Standard AC offers to southeast Asia were in the high-$90s/t cfr in the week to 15 August, while Argus assessed standard caprolactam-grade amsul at $185-190/t cfr southeast Asia in the same week.
AC imports to Malaysia in January-June were stable from the previous year at 354,000t, according to the latest Global Trade Tracker data. China is the main AC supplier to Malaysia, accounting for 353,300t.
But amsul imports to Malaysia fell by 25pc on the year to 331,000t in January-June. Deliveries from China slipped by 38pc on the year to 238,000t, while imports from Japan and Taiwan rose slightly to 33,700t and 30,100t respectively.
Standard caprolactam-grade amsul prices in January to June this year have been higher at $169/t cfr on an average midpoint basis, compared to $154/t cfr in the same period last year, according to Argus data. The higher prices could have discouraged importers from readily purchasing large volumes of amsul, leading them to adopt a hand-to-mouth purchasing strategy.
At current prices, AC costs approximately $386/t on a dollar per tonne nitrogen basis, while amsul costs around $893/t. Amsul is twice as expensive compared to AC on a pure nutrient basis, which has encouraged Malaysian importers to make the switch to AC. AC is mainly used on oil palm plantations, because the crop is hardier and more resistant to damage from repeated applications of AC.
Malaysian importers will likely continue to procure more AC this year because it is comparatively more affordable. But an ongoing 60-day customs inspection approval process for Chinese AC exports could mean importers must secure cargoes earlier to ensure timely arrival for application.
