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Yara to cut fertilizer production at two European plants amid rising gas prices


Plants have total capacity of 1 mil mt of ammonia

Production costs rise on higher natural gas prices

Global fertilizer giant Yara is cutting production at two European plants this week in response to soaring natural gas prices, the company said March 9.

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Ammonia and urea production is expected to be at 45% capacity at its Ferrara and Le Havre plants in Italy and France, respectively, by the end of the week, the company said. The two plants have a combined annual capacity of 1 million mt ammonia and 900,000 mt urea.

"I was expecting this," a European ammonia trader said. "Others [are] to follow."

Dutch natural gas prices have risen over 1,100% from a year ago as S&P Global Commodity Insights assessed the Dutch TTF month ahead price at $67.925/MMBtu March 8, up from $5.622/MMBtu a year ago.

Natural gas is the predominant feedstock in ammonia production. Assuming current gas prices, production costs are estimated at $2,474/mt for ammonia, according to Yara's cost calculations.

S&P Global assessed the CFR Northwest Europe ammonia price at $1,400/mt March 8, based on an indication of value at $1,500/mt and rising cash costs. The assessment is the highest since S&P Global launched ammonia prices October 12, 2021.

The company said it would continue to monitor the situation and use its global production system to continue supplying customers. It would, however, cut production "where necessary due to challenging market conditions."