Far East Asia leads global blue ammonia price gains in April

Blue ammonia prices rose in April, with gains of 10% seen in Far East Asia, S&P Global Commodity Insights data showed.

Platts, part of Commodity Insights, assessed blue ammonia CFR Far East Asia at an average $421/mt in April, back to levels seen in January.

Delivered blue ammonia prices in the US rose 2% to $499/mt while CFR Northwest Europe was also up 2% to $520/mt, remaining the highest-priced region and reflecting price moves in the conventional ammonia market.

The global conventional ammonia market disconnected further through April, with spot demand absent in Europe and a lower Tampa settlement weighing on prices west of Suez, while tightening supplies supported the market in Asia.

Platts blue ammonia prices assessments are based on the conventional ammonia market price plus a premium reflecting the costs of carbon capture and storage.

The Platts Ammonia Price Chart illustrates monthly averages of daily assessments for gray, blue and green ammonia across a range of geographies and delivery options.

Blue ammonia is made from fossil fuel-derived hydrogen, capturing the associated CO2 emissions, while green ammonia uses hydrogen from renewables-powered water electrolysis. Assessments assume a levelized cost of renewable power input for green ammonia.

Green ammonia calculated costs of production fell, reflecting methodology changes to the weighted average cost of capital for hydrogen projects, as part of the yearly methodology review.

The changes also reflect a move to regional rather than global figures for the weighted average cost of capital.

Conventional ammonia markets

Yara and Mosaic had settled at $450/mt CFR Tampa for May deliveries, down $25/mt month on month on higher output in the US Gulf and waning inland US demand.

Northwest Europe was, meanwhile, stable to soft with Algeria FOB suppliers consistent in price expectations and some outages. Yara's 800,000 mt/year ammonia plant at Brunsbuettel was halted April 10 because of an underground water leak.

Planned maintenance was ongoing at the Le Havre plant. Fertiberia also began scheduled maintenance at its 373,000 mt/y Palos de la Frontera site.

A shutdown at the Ma'aden plant in Saudi Arabia, meanwhile, limited supplies for the Asian market.

Tentative trade steps

While renewable and low-carbon ammonia project developments retained momentum, there remained some hesitancy around the development of trade.

"We are in a situation where buyers want to 'wait and see' but [we] need some buyers who want to commit for the development of the low-carbon hydrogen economy," a source at a Japanese financial institution said.

Project developers are seeking to lock in long-term supply contracts, though are having to compromise to meet the demands of offtakers.

One renewable ammonia project developer in Europe is targeting 15-year contracts but said "the market is not at that stage and therefore we are willing to negotiate."

However, supply deals were starting to emerge, with the Abu Dhabi National Oil Company sending a bulk shipment of certified low-carbon ammonia to Japan's Mitsui earlier in May.

The delivery marked the first shipment of low-carbon ammonia derived from hydrogen with carbon capture and storage (CCS), building on a series of demonstration cargoes shipped by ADNOC to customers in Asia and Germany.

The shipment was produced by nitrogen fertilizer and ammonia distributor Fertiglobe -- in which ADNOC owns a 42% stake -- after the state-owned enterprise earmarked some $23 billion on decarbonization and clean technology.

Dutch import hopes

The Port of Rotterdam is progressing its plans to develop an ammonia cracking hub, where the port authority sees a "significant role" for the technology.

"I think the first use of this green ammonia will be substitution of gray ammonia, and then quite quickly you could see it becoming a hydrogen carrier," Port of Rotterdam Authority CEO Boudewijn Siemons told S&P Global Commodity Insights in an April interview.

But Siemons noted ammonia's use as a hydrogen transport vector would come with a cost, which would have to be balanced against compressed and liquified hydrogen pathways similarly incurring regasification costs.

"Hydrogen is a difficult molecule, if you are going to use it in the hinterland it is better to transport it via pipeline, which is safer," he said at the World Energy Congress in Rotterdam.

Substituting grey hydrogen with green at the port also presented a "logical" way to scale the hydrogen economy and establish an ammonia value chain.