THE COLLIERY GUARDIAN

AND

JOURNAL OF THE COAL AND IRON TRADES.

Vol. CX.

FRIDAY, AUGUST 27, 1915.

No. 2852.

The Sulphate of Ammonia Association.

A statement has just been issued by the Sulphate of
Ammonia Association which usefully epitomises the
work now being carried on by this vigorous organisation.
The pamphlet deals with the causes leading up to the
formation of the association, and the nature of the
propaganda, and concludes with a strong appeal to
outside makers. Below we give some extracts from
this interesting statement.

The disastrous fall in prices in 1896 brought about a crisis
in the sulphate of ammonia market, and led British manu-
facturers to form their first association to further the
interests of the trade. The late Colonel Sir S. A. Sadler
and Mr. W. G. Blagden may be said have been the “ onlie
begetters” of the movement towards co-operation, v^hich
resulted in the formation of the Sulphate of Ammonia
Committee in July 1897. Associated with them, as
’members of the first committee, were Messrs. Isaac Carr,
F. T. Cotton, R. Dempster, William Fraser, John Fyfe,
Edward Harman, R. G. Perry, and Hanbury Thomas, who
have continuously given their energy, thought and time to
the objects in view from 1897 to the present day. The most
eloquent testimony to the work of this committee, acting
in concert with similar propaganda bodies on the Continent,
is the fact that the consumption of sulphate of ammonia in
the world has risen from about 250,000 tons in 1896 to
1,250,000 in 1913, and that, in spite of ever increasing pro-
duction and severe competition from other forms of nitrogen,
the price has been maintained at a level of dH.l/jei4 per
ton, as compared with £7/T8 when the committee com-
menced operations.

During the last fewT years it has been evident that the
sulphate of ammonia trade is approaching another crisis, and
the appearance of synthetic sulphate of ammonia as a
commercial product in 1913 convinced members of the
Sulphate of Ammonia Committee that the scope of their work
and influence would have to be largely increased if a repeti-
tion of the events of 1895-6 was to be avoided. In view of
the formidable array of well organised competitors with
which they found themselves faced in the nitrogen market,
British producers determined to form a selling association
which should fully represent British sulphate of ammonia at
home and abroad, and through which British manufacturers,
acting together, should be able to exercise an influence in
the world’s markets commensurate with the weight of their
production. The outcome of this determination was the
formation of the Sulphate of Ammonia Association in the
autumn of 1914. The propaganda branch of the association
is carrying on the propaganda work of the Sulphate of
Ammonia Committee. The selling branch is the central
channel through which all British manufacturers may dispose
of their sulphate of ammonia.

The principle of combination has long been recognised
in the sulphate of ammonia trade. In many foreign
countries it has taken the form of a syndicate, and in Great
Britain this same principle has been tacitly admitted ever
since the first middleman began to buy sulphate of ammonia
from different manufacturers, collect it into shiploads, and
sell it to overseas consumers. But a product which could
be sold with such a large margin of profit was not likely
to lack producersthe production of sulphate of ammonia
was bound to increase, and it has increased enormously all
the world over. In spite of this enormous increase, sulphate
of ammonia still figures as the deus ex machind in the
denouement of many a new coal, shale, or coke oven
company’s prospectus — the sure guarantee of a dividend
should all other products be worthless.

But while the production of the salt as a by-product has
been and is increasing largely, sulphate of ammonia has to
face the competition of other nitrogenous fertilisers, such as
nitrate of soda, cyanamide or nitrolim and nitrate of lime;
and within the last eighteen months a new and inexhaustible
source of supply of nitrogen has been successfully tapped
and synthetic sulphate of ammonia placed upon the market
on a commercial scale. In 1911 the United Kingdom had
to yield the first place as a producer of sulphate of ammonia
to Germany, and a few manufacturers here soon became
alive to the danger threatening overseas markets. The
danger was seen to be all the more real because the German
producers had long ago given up competing with one another
and had formed a powerful combination, controlled
practically by one man with an advisory committee behind
him.

What the Germans Have Done.

With the formation of their syndicate, the Germans
deliberately adopted one policy, which they have ever since
carried out with perfect consistency. They foresaw that
unless they were able to increase their home consumption
to a very large extent, their production would have to com-
pete with British sulphate of ammonia in the overseas
markets, and this competition would certainly lower the
general level of price enormously. The Germans, therefore,
set about increasing their own consumption, firstly, by
admirably conducted experiments and propaganda work;
and secondly, by keeping their price lower than the price
of nitrate of soda, unit for unit. German prices have conse-
quently often been lower than British prices, although the
bulk of the German make was and is of 25 per cent, quality
as against British 24-24J per cent.

In an interesting paper recently read before the Society
of British Gas Industries, attention was drawn to this
apparent anomaly. In the discussion which followed, the
conclusions drawn were that credit must be due to the
British manufacturer for having obtained better prices for
his inferior quality, and that it would not pay British
manufacturers to make a better quality, seeing that they got
better prices for 24 per cent, than the Germans did for
25 per cent. I The founders of the Sulphate of Ammonia
Association were not disposed to take so optimistic a view
of the situation; they looked to the future rather than to
the past, and their object in forming the association was to
put British manufacturers in a position to meet the dangers
ahead.

The fact is that the Germans did not hold for higher
prices because they did not want to do so; their policy was
to keep prices moderate and develop their own consumption.
But in .spite of the enormous increase in home consumption
which they were able to effect, from 96,000 tons in 1896 to
460,000 tons in 1913, their reports for the last few years
have shown a growing anxiety as to the future of the
market, in view of the very large increase in the production
of nitrogenous manures throughout the world. This anxiety
and their determination to control and limit any new output
of sulphate of ammonia as far as possible became evident
in the measures they adopted when the Badische Anilin
and Soda-fabrik took them by surprise, in the autumn of
1913, by offering synthetic ammonia as a commercial product.
The syndicate and the company came to terms, but only
after a lengthy fight which resulted in a heavy fall in the
price of sulphate of ammonia all over the world. The
syndicate had to submit to very heavy monetary sacrifices,
but they obtained control of the company’s sales.

Early in 1914 it was known that the supplies of nitrogen
available to the world in 1914-15 might be about—
1,500,000 tons sulphate of ammonia
2,700,000 tons nitrate of soda
300,000 tons cyanamide (nitrolim)

70,000 tons Norwegian nitrate of lime.

The German syndicate came to the conclusion that pro-
duction had outstripped probable consumption, and
accordingly began taking orders for forward delivery at
prices at which British manufacturers were not willing to
sell. In this way, very large quantities, totalling about
156,000 tons, were sold to America, Java, and the West
Indies, for delivery during 1914, and the spring of 1915,
whilst Spain, Japan, Ceylon, and Egypt were also invaded.

It may be remarked in passing that the Germans have
always made a point of cultivating primarily those markets
which offered the best guarantees of financial stability, e.g.,
Java and America; leaving to British manufacturers and
merchants markets like Japan and Spain, which have at
times shown great financial weakness, and require three or
six months’ credit. They have also shown a preference for
“ big deals,” for which Java and America are also the best
markets. In this again, they have been pursuing a definite
policy; they were determined to secure a safe outlet in the
safest markets, and once having obtained a footing in these
markets, they proceeded to strengthen their hold by deliver-
ing one standard quality of salt and packing, and one only
—the best.

They were able to undertake very large orders within a
few months owing to the fact that each member of the
combine has to be prepared to store a large portion of his
make. When it is a question of export orders, therefore,
German producers of sulphate of ammonia are able to act
quickly, on a large scale, and as one man. As regards their

home market also, there is a complete understanding
amongst the various groups.

The Need for a Strong British Combine.

This was the situation which led manufacturers here to
form the Sulphate of Ammonia Association in 1914. They
were convinced that only by combination could the menace
of German methods and organisation be met.

What was the British method of selling prior to the
formation of the association? The British producer, as a
rule, was not in direct touch with the export market; it
would, indeed, be practically impossible for the 500-600
makers in this country all to be selling direct in foreign
markets. That principle of combination to which we have
alluded above, asserted itself as a necessity in the early
days of the trade, and produced the export merchants.
The export trade of the United Kingdom has now for many
years been in the hands of comparatively few merchant
dealers. They have acted most efficiently as distributors,
and the development of the export markets in many
countries is due largely to their initiative and far-sightedness
in acting as bankers as well as suppliers to their customers.
On the whole they have worthily represented British trade.
But the fact that the trade is in their hands, and that they
are few in number, while the manufacturers are many,
makes them to a large extent independent of producers, and
the latter are thus deprived of adequate control of a market
in which they have a vital interest.

To take a simple instance, there has never been anything
to prevent British merchants from placing orders with the
German syndicate. Indeed, British merchants have
frequently been compelled to go to Germany for supplies,
for the simple reason that the quantity of high-testing
sulphate of ammonia produced here was not large enough
to satisfy the demand from overseas consumers. For it
must be remembered that only a small proportion of British
sulphate of ammonia tests 25 per cent., and only a portion
of this is guaranteed at 25 per cent.

But from the British manufacturers’ point of view it is
objectionable that German sulphate of ammonia should thus
obtain a footing in what used to be British markets. The
remedy lies in the British producer’s own hands. Let him
turn out a quality equal -to German salt, let him combine
to sell together with his fellow-makers, and he will be able
to control the merchants and will hear less about German
competition.

In respect of market information again, the British manu-
facturer has hitherto been at a disadvantage compared with
merchants. For the dealers are in close touch with all
overseas markets as well as with all local home markets,
whereas the manufacturer is, to a certain extent, isolated
and information takes longer to reach him.

It is obvious that occasions must arise when the opinions
of merchants and manufacturers about the market differ
considerably, and when that has happened in the past the
merchants have always been able to persuade a certain
number of producers that their view •. was the correct one.
So that even if a majority of manufacturers here held the
opposite view, they were unable to enforce it. Why not?
Because there was no practical means of registering such a
consensus of opinion even if it existed; still less was there
any machinery available for giving practical effect to it.

This dualism of control in the English market tends to
give the German syndicate very marked advantages over
British producers; for while merchants and makers here
are disputing in the language of bids and counter-offers as
to whether or no the time has come to sell, the Germans
slip in and take the orders. This is especially the case with
regard to forward orders. We will suppose that we are in
the month of June, and that Java is sending large enquiries
for shipment during the following spring. Let us assume,
also, that the Germans have come to the conclusion (as they
did early in 1914) that there is likely to be an excess of
nitrogen in the spring, and that they wish to sell 150,000
tons sulphate of ammonia. They naturally turn to the
markets in which 25 per cent, quality is best appreciated.
Java is one of these. They ascertain at about what price
British merchants are sellers, and proceed to underquote them.
In this way preliminary orders for a few thousand tons may
be placed with Germany. Now, what is the position here?
Merchants go to manufacturers with the enquiries, and
endeavour to persuade them to make offers at a price which
will compete with German prices. Each manufacturer here
tends to consider the problem from the point of view of his
own make, and is perhaps inclined to wait a few months
longer before committing himself to spring selling, especially
at what may seem to be a low price.