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Global ammonia prices rise in August as supply tightens


Northwest Europe becomes most expensive region

European green, blue projects gather steam

Tight supply supports conventional ammonia prices

  • Author
  • James Burgess
  • Editor
  • Jonathan Fox
  • Commodity
  • Electric Power Energy Transition Natural Gas Oil Metals Shipping

Global blue ammonia cost-of-production price assessments edged higher in August, with Northwest Europe retaking the price top spot from Far East Asia, and US Gulf prices recovering after a protracted spell of falls.

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Supply constraints were at the fore in conventional ammonia markets, pushing prices higher.

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. Platts is part of S&P Global Commodity Insights.

Prices in the Middle East rose sharply, with FOB blue ammonia prices climbing more than 20% month on month to average $369/mt in August.

Conventional ammonia supply constraints in the Middle East and Southeast Asia persisted, with Saudi supplier Ma'aden heard struggling to restart its 1.1 million mt/year MPC ammonia plant following maintenance. It was reported that the plant would likely only resume production in mid-September, potentially impacting Ma'aden term commitments. Firm demand in India also pushed prices higher.

Fertiglobe, the largest nitrogen fertilizer producer in the Middle East and North Africa, said it expects nitrogen prices to climb from the lows seen in the second quarter, underpinned by increased demand and record low inventories.

"We believe that limited incremental supply additions over the next several years, coupled with healthy farm economics, which incentivize nitrogen fertilizer application, and elevated marginal production costs in Europe continue to support a favorable nitrogen outlook in the medium to longer term," Fertiglobe CEO Ahmed El-Hoshy said in an Aug. 2 statement.

The company expects to make a final investment decision on the UAE-based Ta'ziz 1 million mt/year low-carbon ammonia project in the "coming months", with the front-end engineering design process starting in the second half of 2023 for both its green hydrogen project in the UAE and its full-scale green hydrogen project in Egypt.

German green crops

In Europe, Yara signed cooperation agreements with German cereal group Bindewald & Gutting Milling and Harry-Brot to supply fertilizer from its Rostock plant produced from green ammonia from Norway. The deal is the first project in Germany using Yara's green fertilizer, it said, with first applications in the field planned for the 2023/24 growing season.

The project will run for an initial one-year period, with the green fertilizer produced in the fourth quarter of 2023 and applied in the spring of 2024, a Yara spokesperson told S&P Global.

And Horisont Energi's Barents Blue ammonia project is back on track, with the company signing a joint development agreement with Fertiberia and securing power supply for the planned plant. Horisont subsequently also brought Poland's PGNiG onboard as the operator for the Polaris CO2 storage license, which underpins the project.

Green ammonia prices delivered to Northwest Europe are close to double those for blue ammonia, CRF Northwest Europe, according to Platts assessments.

Elsewhere in Europe, German utility EnBW has signed an investment agreement with Skipavika Green Ammonia (SkiGA) in western Norway to acquire a 10% equity stake in the project and has secured exclusive long-term offtake rights.

The 100,000 mt/year green ammonia plant in Gulen municipality, to be constructed near the Mongstad refinery, is due to be completed in 2026.

Green ammonia CO2 credits

In Latin America, green hydrogen and ammonia project developer ATOME Energy has identified a further revenue stream from its planned 120-MW phase 1 Villeta project in Paraguay.

The project, due online from late 2025, could generate around 500,000 carbon credits per year, displacing around 500,000 mt/year of CO2 equivalent through green calcium ammonium nitrate fertilizer production, it said in an investor update.

Phase 2 of the project will bring capacity to 420-MW of electrolysis to supply up to 360,000 mt/year of green ammonia from 2027.

Green ammonia momentum continued apace elsewhere, with Hyphen Hydrogen Energy signing a memorandum of understanding with ITOCHU Corporation of Japan to explore collaboration on Hyphen's planned 3-GW green hydrogen and ammonia project in Namibia.

The deal opens further opportunities for Hyphen to ship green ammonia to the key Asian market of Japan, CEO Marco Raffinetti said in a statement.

"Namibia has the potential to become a long-term strategic partner to Japan for the supply of green hydrogen, well beyond the scale of Hyphen's project, given Namibia's unique competitive advantages in green hydrogen production," he said.

Hyphen and ITOCHU are to now enter talks on areas of potential collaboration on the project, which will be powered by around 7 GW of renewable generation, using the hydrogen to produce 1 million mt/year of green ammonia from 2027 and 2 million mt/year at full scale by 2029.

The MOU with ITOCHU is the latest in a series that Hyphen has signed on ammonia offtake to Europe and Asia.

And in India, ACME and Tata Steel have agreed to develop a 1.3 million mt/year renewable ammonia project in Odisha, for exports and domestic supply.

Marine fuel potential

Ammonia's use as a potential shipping fuel is also gaining further traction, with a study finding ammonia-fueled gas carriers could be cost competitive by 2026, and Norwegian ship manager OSM Thome partnering with Pherousa Green Shipping to construct and operate Ultramax dry bulk carriers with ammonia cracking technology.

Pherousa Green Shipping plans to order six 63,000 dwt ships powered by hydrogen produced on board from ammonia via cracking, thereby avoiding issues of corrosion and toxicity associated with ammonia use as a fuel.

Meanwhile, storage company Vopak is looking to expand its ammonia tank capacity in Singapore. The company currently has a 10,000 cu m tank ammonia storage tank at the terminal which is already importing and distributing ammonia.

Renewables-based prices

Platts renewable-power derived ammonia prices are more stable than their gas-derived counterparts as they reflect long-term levelized costs of electricity for both solar and wind generation.

These are relatively static variables month on month, while the "delivered into" component of these assessments reflect weekly shipping prices.

Platts blue ammonia assessments have gone from a premium to renewable-derived green ammonia prices earlier in 2023 to a considerable discount, with green ammonia assessments averaging between $753/mt and $802/mt in August, slightly firmer month on month.