Ammonium nitrate ban could impact ammonia supply: traders

Russia's two-month ban on ammonium nitrate exports (AN) announced earlier this week could increase the supply of ammonia into Europe if exports are allowed, trade sources said Feb. 3.

The Government of the Russian Federation announced on Feb. 2 the Feb. 2-April 1 ban on the export of AN, citing additional need for AN in the domestic market from agricultural producers and industrial enterprises. Ammonium nitrate is one of two main sources of nitrogen fertilizer, with the other main source of nitrogen being urea.

The ban did not specify whether ammonia gas -- one of the key feedstocks of AN -- could instead be sold into the market rather than be converted for domestic use. A Mediterranean trader said the ban did not extend to ammonia exports.

"Russian producers could export more ammonia due to the export ban (on AN)," the trader source said. "That could be enough to tip the market down."

Ammonia prices have stabilized somewhat following months of steady rises, following the trajectory of European gas prices higher. S&P Global Platts assessed FOB Black Sea price at $1,090/mt Feb. 3, down $10 based on a netback from Northwest Europe. The FOB Black Sea price closed 53.5% higher than the Platts price Oct. 12 when launching the assessment.

Platts assessed the CFR Northwest Europe price at $1,140/mt, down $10 on the conclusion of the FOB Baltic contract between Yara International and Russian producers at $1,115/mt for March plus freight. The CFR Northwest Europe prices are 50% higher from the same date of the assessment launch.

After months of steep increases, ammonia prices could face more volatility in the coming months with supply uncertainty around the Black Sea, the trader said.

"Ukrainians are turning off all gas-powered pumps for the pipeline and basically running on electric pumps," the trader said. "They are running at 50% to 60% output. The Baltic may have to compensate for some of the losses in the Black Sea."

On the supply side, more ammonia could create pressure on European prices with a single 20,000-mt cargo enough to push the market down, the source said. After weeks of tight supply cargoes were heard to be available from Egypt, Libya, the UK and France, he said.

Another cargo was heard offered at $970/mt FOB Indonesia for immediate loading. The cargo had gone unsold for several weeks.