Agriculture Offseason Weights Global Ammonia Prices to Plunge in July 2023

The recent assessment shows, Ammonia prices have continued to decline throughout July 2023 as demand from downstream fertilizer and agrochemical industry witnessed depreciations across Asia-Pacific, Europe, and North American regions. Fluctuations in the prices of feedstock Natural Gas have also significantly impacted the prices of Ammonia and its downstream derivatives.

Prices of Ammonia in the North American market slumped by almost 19% as the demand from the downstream fertilizer industry continued to struggle. Securing bulk material was restricted due to high interest rates, imposed by the Federal Bank in order to curb inflation. Additionally, the peak summer season also contracted agricultural activities which in turn slowed purchasing activities from the regional consumers. Exports to the international market were also low throughout July 2023 due to offseason.

The effect of prices of Ammonia in the Asia-Pacific market is determined by the price movements in China and India, which are the two key producers of Ammonia in the region.  In China, the market witnessed a marginally bullish trend in which prices rose by 2%. However, in India prices continued to be bearish throughout July 2023, recording a depreciation of almost 3%, due to cheap imports of feedstock natural gas from Russia. The marginal increment in Ammonia prices in China was attributed to the appreciation of prices in the feedstock coal by almost 5%. The demand from the downstream fertilizer industry continued to be low throughout July 2023, in both countries due to the offseason, as plantation season has already passed.

The market situation for Ammonia in Europe was also bearish where prices plummeted by almost 11%. The demand from the downstream urea and other fertilizer producers continued to be muted as the peak agriculture season had ended, which prohibited purchasing activities in the region. Bulk purchases for Ammonia were restricted, and procurements were low as plantations and harvesting activities were minimal. The off-season demand for fertilizer in the agriculture industry also limited the trade within Europe.

As per the ChemAnalyst, prices of Ammonia are expected to witness a bearish situation in the North American and Asian markets as demand from the downstream fertilizer industry is anticipated to be low along with low export orders in the international market. However, prices of Ammonia may rise in the European region because of rising grain prices due to a withdrawal of Russia from the Black Sea Grain initiative. This withdrawal has already tensed global economies who rely on other countries for grains.