Ammonia Prices Continue to Surge Globally Amidst Supply Chain Constraints

The global Ammonia market sustained a notable surge during the initial week of November 2023. This upward movement in prices is primarily ascribed to the elevated costs of crucial feedstock Natural Gas, a shortage in supplies, and a steadfast demand for Anhydrous Ammonia from the international fertilizer market.

During the initial week of November, Anhydrous Ammonia prices experienced a continued upward trend in the USA market, albeit with only a marginal increase. The escalation in prices can be attributed to the rising costs of feedstock Natural Gas and energy within the country, which consequently resulted in heightened production expenses and subsequently raised Ammonia prices. Additionally, the recent adverse cold weather conditions in the country caused disturbances in trade activities and supplies, leading to a ripple effect on Natural gas prices. As a result, producers exercised caution in expanding Ammonia production in the face of escalating feedstock and energy costs. Moreover, the availability of imported Ammonia remained constrained in the USA market during this week. This limitation stemmed from the major Ammonia exporter, Trinidad and Tobago, grappling with prolonged Natural Gas supply issues, resulting in restricted Ammonia production. On the demand side, the domestic Ammonia market performed suboptimally during this week, coupled with limited procurement activity from the Asian market during the same period. However, export orders from South America remained robust.

Similarly, in Europe, there was a noticeable increase in Anhydrous Ammonia prices, with a rise of 3.7% in Russia and 8.3% in Germany during the initial week of November 2023. The heightened prices in both countries can be attributed to the increased cost of feedstock Natural Gas and elevated energy prices in the region, which served as incentives for higher production rates in Russia, subsequently leading to an upward trend in prices. Insights from various market participants have revealed an increased demand for the product from the international market amidst the continued suspension of exports by China. Unfortunately, the available supplies in the region have proven insufficient to meet this heightened demand from international market. While demand from the fertilizer industry in Russia has diminished with the conclusion of the peak planting season, there has been a consistent and strong demand for downstream amino acids during this period. This sustained demand for amino acids has further contributed to the upward pressure on Ammonia prices. Additionally, a major chemical producer in Germany, BASF, has announced a reduction in production rates and the shutdown of significant energy incentive facilities, including two Ammonia plants. This development raises concerns about a potential shortage of the product in the European market in the coming months.

As per ChemAnalyst, it is anticipated that Anhydrous Ammonia prices may continue to surge in the forthcoming months in the global market amidst a shortage of Ammonia supplies and elevated feedstock prices.