‘Cheap Ammonia Era is in the Rear View’ – Fertilizer prices soar due to Europe’s natural gas crisis


Fertilizer market prices are picking up again as an energy crisis in Europe makes nitrogen production more expensive.

he price of gas, the main feedstock for high-nitrogen ammonia fertilizer, has skyrocketed in Europe after Russia cut supplies to its largest market after invading Ukraine and imposing Western sanctions. This makes fertilizer production more expensive.

The cheap ammonia era is “in the rear view,” Alexis Maxwell, an analyst at Bloomberg’s Green Markets, said in a note.

Green Markets Tampa’s Ammonia Spot Price Index rose nearly 15 percent, the highest since March. New Orleans urea, a common nitrogen fertilizer, posted a weekly price increase of more than 7 percent on Friday to its highest level since May.

“This fertilizer bull run certainly has legs in the fourth quarter,” Maxwell said in an email.

It comes as Germany’s BASF, the world’s largest chemical company, is reportedly considering further cuts in ammonia production due to rising natural gas prices, two sources familiar with the matter said, with potential implications for everything from agriculture to carbonated drinks.

Germany’s biggest ammonia maker SKW Piesteritz and number four Ineos also said they couldn’t rule out production cuts as the country struggled with disruption to Russian gas supplies.

Ammonia plays a key role in the manufacture of fertilizers, engineering plastics and diesel exhaust fluids. Its production also produces high-purity carbon dioxide (CO2) as a by-product, which is required by the meat and fizzer industry.

Unlike many European countries, Germany does not have liquefied natural gas (LNG) port terminals to replace Russian pipeline gas. That means companies are under political and economic pressure to scale back gas-intensive activities if gas supplies are cut further.

BASF in September shut down ammonia production at its headquarters in Ludwigshafen and its large chemical complex in Antwerp, Belgium. The production rate is still reduced and could be lowered further, although the company will closely monitor the fallout, the two sources said.

BASF told Reuters that it would continue to meet its internal ammonia needs and demand from external customers, and declined to disclose plant utilization rates.

Fertilizer giant Yara, which operates Germany’s third-largest ammonia production facility in the northern city of Brunsbuettel, said its production across Europe is currently 27% below capacity due to soaring gas prices. ‘Cheap Ammonia Era is in the Rear View’ – Fertilizer prices soar due to Europe’s natural gas crisis

Fry Electronics Team

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