Blue ammonia prices diverge as Northwest Europe extends gains in November

Platts delivered blue ammonia prices diverged in November, with Northwest Europe extending gains while prices in Asia softened.

Blue ammonia CFR Northwest Europe rose 4% month on month to an average of $676/mt, while CFR Far East Asia prices dipped 3% to $480/mt. US Gulf prices were flat at $589/mt.

Platts blue ammonia price 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.

The green ammonia calculated costs of production assessments were broadly stable month on month. These are based on longer-term weighted average costs of capital and levelized power costs.

Platts, part of S&P Global Commodity Insights, assessed delivered green ammonia costs in a range of $898-$1,053/mt, with the lowest cost for delivery to Far East Asia from Australia, and the highest delivered from west coast Canada to the same destination.

US Gulf targets exports

The cost to supply carbon capture and storage-enabled low-carbon ammonia from the US Gulf Coast was reported by potential suppliers to lie at a minimum of $400-$600/mt FOB in November.

However, with actual demand still lacking and consumer incentives and obligations still lacking, it was broadly acknowledged that no premium on conventional ammonia could be achieved on a FOB basis along the US Gulf Coast or on a CFR basis in Japan and South Korea.

Accordingly, the market-based US Gulf Ammonia Price (UGAP), a daily spot assessment of the FOB market for low-carbon ammonia along the US Gulf Coast launched Nov. 1, was assessed through November in line with conventional ammonia pricing in the US Gulf in the range $500-$510/mt FOB.

In the US, following the re-election of Donald Trump, market participants raised concerns regarding the future of certain aspects of the Inflation Reduction Act, namely the 45V tax credit for clean hydrogen production.

However, the 45Q tax, which will provide an incentive of $85/mt of CO2 captured and sequestered, was expected by many to survive any revisions to the IRA, pleasing Gulf Coast low-carbon ammonia project developers.

The US Gulf Coast is set to become a major supplier of low-carbon ammonia, with Europe, Japan and South Korea among the markets targeted by project owners in the US.

BP Vice-President of US hydrogen Tomeka McLeod said the Gulf Coast was a "really good geography to be able to do blue hydrogen and particularly blue ammonia as well."

Germany and the Netherlands are eyeing imports of green ammonia and other hydrogen derivatives under the H2Global import mechanism, with the European Commission approving state funding commitments of Eur3 billion on Dec. 18.

H2Global is targeting the launch of its second auction in the first quarter of 2025.

Elsewhere in North America, efforts to develop Western Canada as an exporter of low-carbon ammonia to the Asia-Pacific region could run into similar challenges faced by the region's LNG projects, raising concerns about potential permitting, construction, transportation and cost hurdles, market sources said.

High rail transport insurance costs also posed barriers, sources said. Canada is developing several projects on both coasts to export hydrogen and derivatives.

Japan Korea ammonia prices

The Japan Korea Ammonia Price (JKAP) assessment was assessed in the range of $435-$475/mt CFR in November, in line with conventional ammonia pricing in the Far East but reflecting the higher cost of freight to Japan over other Far East Asian markets from key supply hubs.

This was down from $465-$475/mt CFR in October, the change reflecting pressure on prices in the conventional ammonia market east of the Suez Canal.

The Japan Ammonia Energy Substitution Index (AESI) firmed up in the second half of November, leaving theoretical buyer willingness for ammonia above the market-based JKAP assessment.

The Japan AESI, which indicates what a power generation company in Japan may be willing to pay for ammonia as an alternative to traditional feedstocks, started the month of November at around $477/mt and slipped to a low of $456/mt before closing the month at $486/mt, reflecting an uptick in Japanese power pricing.

Market participants said Indian and Chinese green ammonia projects were likely to have the competitive edge in South Korea's hydrogen power market tender, which concluded in early November. Market sources said winning bids could be around $800/mt on a delivered basis.

Meanwhile, megaproject developer InterContinental Energy expects the cost of renewable ammonia to fall below $650/mt at its 50-GW Western Green Energy Hub project in Western Australia during the targeted first phase starting in 2029. WGEH is the largest renewable hydrogen/ammonia project in Australia.