Volatility in crude and natural gas in October and November has made its presence felt in the fertilizer market where fertilizer market has observed remarkable price jumps as natural gas forms a key feedstock for Ammonia and nitrates. Devastation caused by hurricane Ida and its aftermath forced several plant shutdowns while planned turnarounds meant already long supply tightened further.

In US, Ammonia production plunged in October on the back of curtailed nitrogen output forced by devastation caused by Hurricane Ida. Not only nitrogen production was curtailed, Florida based Mosaic and Incitech owned Dyno Nobel facilities at Faustina and Waggaman respectively, also went offline in the aftermath of the hurricane severely limiting the ammonia supply. Illinois headquartered CF Industries holdings earlier announced planned turnaround which concluded in November further rattling supply fundamentals.

In the light of the above factors, US ammonia made a steep jump where prices soared from USD 630-670 per MT in early October to in excess of USD 1100 per MT across various regions of USA. CF and Mosaic agreed for a hefty spike in CFR ammonia prices and leaving buyers shellshocked as prices crossed USD 800 per MT. FOB and CFR numbers have climbed to a 13-year high.

European natural gas crisis sent shock shockwaves in the fertilizer market where manufacturers, pushed by climbing energy prices and feedstock crunch, once pondered over the idea of plant closures. Northwestern Europe mostly dependent on imports of natural gas struggled for the procurement of the material as the demand increased by leaps and bounds and supply was curtailed. Meanwhile, Russian Gazprom a key exporter of natural gas to Europe remarked that they have no reserves amid questions of hoarding. This pushed natural gas prices to new heights where prices were once assessed at seven times more in comparison to the prices in the beginning of the year.

Following the global pattern, both Baltic Sea and Black Sea discussions were settled at excess of USD 700 per MT on FOB basis.

In India, Ammonia prices increased sharply as critically low availability of Ammonia and furious offtakes due to low inventories level of several fertilizers in front of forthcoming seasonal demand, led to steep rise in Ammonia prices in the country. In addition, soaring freight cost and halted imports activities due to crippling container availability kept on exacerbating the overall price trend. Thus, Ammonia price rose significantly and revolved around INR 43700 per MT Ex-Depot Mumbai.

The outlook of the Chinese Ammonia remains bullish for a major part of the Q4, taking cues from the hiked natural gas and coal prices. In addition, the impact of the norms implemented by the Chinese authorities under dual control on energy consumption to curb carbon emission and restrict power consumption prevailed in the last quarter. As a ripple effect, the current development in the Chinese domestic market strengthened the producer's will for the hike the offered quotations for Ammonia, and FOB Qingdao discussion for aq. Ammonia was settled at USD 822 per MT, during the week ending 22nd October.

Consolidating on the soaring feedstock prices and remarkable increase in the demand, Urea prices also climbed by globally where US Nola prices rose to USD 710 per MT on FOB basis. Internationally, in order to curb exports, Russia and China exaggerated the already long nitrogen market further worsening the downstream urea prices.

Similar trend has also been observed in UAN market where CF made increased offering by USD 100 per MT and finalizing at USD 575 per MT. Supply has been severely tight where market participants mentioned cancelling of orders due to production interruptions caused by hurricane earlier in August.

Amid the frenzied nitrates market, Phosphates have maintained some level of calmness where MAP and DAP measuring limited spike in the prices. MAP increased by USD 20 per MT at NOLA barges and concluded at USD 685 per MT while MAP was stable at USD 710 per MT on FOB basis.

As per ChemAnalyst, “a sharp dip in crude prices and hefty cut in natural gas meant that worst is behind and early signs of ease can be seen in the domestic market of Asia and Europe where fertilizer prices have declined after months of consistent increase. The uncertainty around Omicron and onset of winter in the Northern hemisphere are likely to stabilize the demand growth. Meanwhile, Supply of fertilizers is also expected to ramp up with the increasing availability of feedstock and weakening energy prices.”