Global ammonia prices have rallied in the past two months on the back of record high prices for feedstock natural gas in Europe.
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S&P Global Platts started ammonia assessments on Oct. 12, 2021, and since then prices have been on a bull run.
As of Dec. 15, ammonia prices in Europe were the highest globally at $1,120/mt CFR Northwest Europe (up 47% since the launch), while FOB Black Sea, a major source of ammonia to Europe, was assessed at $1,055/mt (up 49%). The firm prices both for ammonia and the natural gas feedstock in Europe pushed European buyers to look for available spot cargoes around the globe in other major ammonia production hubs, such as the Caribbean and the Middle East, which was had a firming impact on prices globally.
CFR US Gulf Coast ammonia prices were assessed on Dec. 15 at $1,090/mt (up 64% since Oct. 12). FOB Middle East and CFR Far East have seen the largest increases during the same time span, increasing respectively to $1,000/mt (up 90%) and $1,020/mt (up 77%).
The rise in European ammonia prices can mainly be attributed to the rise in natural gas prices since the summer months, with for instance the Dutch TTF day-ahead prices closing on Dec. 15 at $42.91/MMBtu, an all-time high.
"European ammonia plants are being shut down with the feedstock (natural gas) prices rising due to lower supply from Russia and the Nord Stream 2 pipeline situation still unclear," one buyer in Asia said.
With the winter season arriving in Europe, and the natural gas storage continuing to decline, "natural gas is reaching its peak winter demand and the ammonia prices might remain at high levels until February next year," one buyer said.
The Caribbean is typically a major supplier to the US market but, with Europe firmly looking to increase imports, its appetite has had a bullish impact on ammonia prices in the US as well.
Meanwhile, the Middle East, which usually focuses on buyers in Asia, has increasingly been looking to send available spot cargoes to Europe, while trying to focus on fulfilling only their contractual obligations for Asian customers as much as possible.
"The Middle East is enjoying margins right now, as Europe is ready to buy ammonia at high prices rather than produce themselves," an ammonia end-user in the Far East said.
The source noted that supplies from Southeast Asia had been tight as well, as a major supplier there had been facing a delay in the restart of its ammonia plant after closing it for more than one month already, although details on this could not be confirmed.
Far East Asia markets in Taiwan and South Korea were mostly impacted by this as they, unlike Japan and China, typically reply on imports for their ammonia needs.
A seller in Asia noted that "there is no spot flow from the Middle East to Asia right now, as the Middle East is focusing on demand from their long-term customers, the rest is going to Europe or the US. I have never seen such a sharp rise in prices globally, with prices almost tripling since the start of the year," a seller said.