- Yara restarting plants at Ferrara, Le Havre
- FOB Middle East offers at $1,450/mt
Soaring ammonia prices are giving European producers the incentive to restart idled capacity as supply shortages keep prices elevated, according to trade sources, says an article published in S&P Global.
Sanctions on Russia
The loss of Russian exports, which typically account for around 4.5 million mt or 20% of the global seaborne trade annually, have followed the closure of the Black Sea Yuzhny port in February following Russia’s invasion of Ukraine. Sanctions on several Russian oligarchs associated with fertilizer production have cut most of the supply from Baltic Sea producers including EuroChem and Uralchem.
“In the coming weeks, if we have one shipment, it will be a miracle,” a Black Sea ammonia trader said. “We’re trying to keep the exchanges alive, but there’s no product to find.”
A lack of available vessels is also keeping deals at bay, the trader said. For buyers or traders who do not own vessels or have long-term contracts in place, the ability to locate a spot cargo and vessel is “almost a lottery,” he said.
Natural gas
To a lesser extent, European ammonia production is expected to recover some lost production which fell off in late 2021 and into 2022 due to soaring natural gas prices. Natural gas is a primary feedstock in ammonia production.
Citing “record-high natural gas prices in Europe, Fertilizer giant Yara cut ammonia production at its sites in Ferrara, Italy, and Le Havre, France, March 9.
The company announced through media reports earlier this week that it was resuming ammonia production at the two sites after completing a number of industry-reported deals, including a record high settlement price of the monthly CFR Tampa contract at $1,625/mt.
The European restarts could put a cap on steep price rises, although there is still “room for further price appreciation in the next couple of weeks,” a European ammonia analyst said.
Prices for cargoes into Northwest Europe are in a range of $1,650-$1,680/mt, she said.
S&P Global Commodity Insights assessed the CFR NW Europe ammonia price at $1,650/mt April 1, down $10/mt and just off the highest mark set March 31 since price assessments were launched Oct. 12, 2021.
FOB Middle East offers at $1,450/mt and above
Other markets also are seeing an impact from the tighter European supply, including the Middle East where producers are offering at $1,450/mt and higher.
FOB Middle East prices have risen nearly 40% over the last month as producers take advantage of higher European prices.
S&P Global assessed the FOB Middle East price at $1,360/mt April 1, up $20/mt on the day.
Did you subscribe to our daily Newsletter?
It’s Free! Click here to Subscribe
Source: S&P Global
