Soaring gas prices, loss of Black Sea roils ammonia markets: traders

Soaring Dutch TTF gas prices as well as the loss of Black Sea production continues to roil ammonia markets as key European monthly contract terms were settled $40/mt higher than the February settlement price, trade sources said March 1.

S&P Global Commodity Insights assessed CFR Northwest Europe ammonia for March at $1,180/mt, up $10 from the prior day's assessment, based on the FOB Baltic Sea contract price at $1,155/mt plus freight to Northwest Europe.

"Most expected the increase on the basis of the current environment," one US ammonia trader said.

The Baltic contract is agreed by Russian exporters including Acron and Eurochem to distribute ammonia to production facilities owned by Yara in Europe. Significant volumes from the Black Sea and Middle East move under the contract.

Last month's February contract settled at $1,115/mt, but the Ukrainian crisis has pushed prices higher, the trader said.

The loss of Black Sea production due to the Yuzhny port and pipeline closure is not expected to recovery anytime soon, a Black Sea trade source said.

The trader reported "rumors" of a pipeline explosion on the 1,500 mile Tolyatti-Odessa ammonia pipeline, which could not be confirmed. S&P Global assessed the FOB Black Sea price at $1,135/mt.

In the US, Yara and Mosaic were unable to agree to a March contract for CFR Tampa, but ammonia trader Trammo settled the price at $1,135/mt Feb. 25 unchanged from the February contract price after talks stalled and both parties failed to agree, a second US trade source said. S&P Global assessed the CFR USGC price at $1,145/mt March 1, up $10/mt from the prior day, on the basis of freight netbacks from Europe.