Global Ammonia Prices Diverge: Stability in the Middle East, Surge in North America Amid Supply Shortages

In the inaugural week of October 2024, the global price of Ammonia prevailed divergent trend. The prices remained stable in the Middle Eastern market despite of ongoing tensions. However, the prices of Ammonia surged in the North American market owing to shortage of both domestically produced and imported Ammonia in the market.

In the Middle East, Ammonia prices remained stagnant despite a significant rise in Natural Gas prices. The price stability is partly due to Ma’aden a key Ammonia producer in Saudi Arabia resuming production at its MWSPC unit as of October 1, following an unplanned maintenance period that extended through late September. With production back online, supply has stabilized, and inventories are sufficient to meet current demand levels. Demand in the region remains moderate, influenced by the geopolitical situation and anticipation of India’s purchase tender results.  The Indian public sector undertaking, Rashtriya Chemicals and Fertilizers (RCF) has initiated a tender for Urea, a downstream derivative of Ammonia, which is contributing to upward pressure on Ammonia demand. This procurement activity is prompting buyers to adjust their strategies and remain competitive in the face of potential price increases. Domestically, a slight increase in demand is noted due to the upcoming rice and millet planting season.

In the North American market, both imported and domestic Ammonia prices have surged notably amid fluctuating supply conditions and ongoing shortages. Production capabilities have been further disrupted by storms, particularly in the southeastern United States, affecting areas like northern Georgia and the southern Appalachians. Tampa, a key hub for fertilizer production, logistics, storage, and corporate operations, was at risk of significant damage; concerns were alleviated somewhat as the storm weakened before landfall and avoided a direct hit. Additionally, Ammonia exports from Trinidad have reportedly slowed, contributing to the supply challenges in the region.

Despite the current price surge, purchasing activities for fertilizers in Ammonia remained moderate in the North American region as persistent hurricanes continued to disrupt agricultural operations. The impact of Tropical Storm Milton, similar to Hurricane Francine, has also affected crop progress along with fertilizer production or retail distribution. According to statistical data released by U.S. Department of Agriculture (USDA), only 47% of the corn crop has been harvested, and just 1% of soybeans have been collected in North Carolina, highlighting the severity of these disruptions. As a result, traders have adopted a cautious approach in securing fertilizer, fearing further crop damage.

It is expected that the price of Ammonia may surge in the global market in face of upcoming fertilizer demand for the winter planting season.