Ammonia
Overview
The ammonia market is undergoing a period of rapid and dramatic change. Conventional or ‘grey’ ammonia is traditionally produced almost exclusively for its nitrogen content. However, the urgent need to decarbonise the global economy and meet ambitious zero-carbon goals has opened up exciting new opportunities.
Ammonia has the potential to be the most cost-effective and practical ‘zero-carbon’ energy carrier in the form of hydrogen to the energy and fuels sectors. This has led to rapid growth of interest in clean ammonia and a flurry of new ‘green’ and ‘blue’ ammonia projects.
Argus has many decades of experience covering the ammonia market. We incorporate our multi-commodity market expertise in energy, marine fuels, the transition to net zero and hydrogen to provide existing market participants and new entrants with the full market narrative.
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Latest ammonia news
Browse the latest market moving news on the global ammonia industry.
Yara second-quarter gas consumption jumps on year
Yara second-quarter gas consumption jumps on year
London, 22 July (Argus) — Fertilizer producer Yara's European gas consumption jumped by more than 40pc on the year in the second quarter and was also higher than in the previous three months. Yara's gas consumption in Europe totalled 34 trillion Btu, drastically up from 24 trillion Btu in the second quarter of 2023 and 29.2 trillion Btu in January-March . Yara did not report its European ammonia production for the second quarter, but its global output totalled 1.78mn t, well up from 1.42mn t a year earlier. Much lower prices encouraged Yara to lift its European production. Yara's European gas costs averaged $9.70/mn Btu in April-June, down from $14.30/mn Btu in the same period of 2023 and the lowest for any quarter since Yara started reporting these numbers in the third quarter of 2021. The firm's European gas costs have fallen sharply since peaking at $34.50/mn Btu in the third quarter of 2022, when European wholesale prices hit all-time highs (see price graph) . Yara's quarterly spending on European gas of $330mn in April-June was the lowest since at least summer 2021, and less than a third of the $1.08bn peak in April-June 2022. Argus assessed European ammonia production prices based on the TTF front-month price at roughly a $90/t discount to northwest European import prices in its last weekly assessment on 18 July, suggesting a significant financial incentive to produce ammonia domestically. Higher ammonia production in Europe helped spur a 7pc rise in deliveries of finished products to the region , which Yara attributed to a belated spring season and the launch of its new season price. Despite Yara's European gas costs being lower than at any other point since summer 2021, it announced a cost and capital expenditure (capex) reduction plan that could see the company focus on using imported low-carbon ammonia in its European fertilizer production, with a potential closure of European assets not ruled out. The company aims to reduce both its costs and capex by $150mn compared with the past 12 months by the end of 2025. Yara emphasised that its ammonia system is the largest and most flexible in the world, and highly scalable. "We can increase the volumes we import and export significantly at a low investment level," it said. Yara already reduced the valuation and expected lifecycle of its Tertre plant in Belgium , one of the company's few European plants that cannot be supplied with imported ammonia. Global production Yara consumed 56.4 trillion Btu of gas globally in April-June, up on the quarter but still below a multi-year high of 61.9 trillion Btu in October-December (see consumption graph). Europe accounted for roughly 60pc of Yara's global gas consumption in the second quarter, up from 54pc in January-March and 51pc in the same period last year. Yara's global average gas cost was $7.90/mn Btu last quarter, 19pc below its reported European cost. That discount has been a significant driver for Yara and others to increase production abroad rather than in Europe over the past two years. Yara forecasts its European gas costs at $10.90/mn Btu and $11/mn Btu in the third and fourth quarters of this year, respectively, well above its global average gas costs of $8.80/mn Btu and $8.90/mn Btu during those same periods. By Brendan A'Hearn Yara European vs global gas consumption million MMBtu Yara European vs global gas costs $/MMBtu Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
EU fertilizer industry calls for support: Q&A
EU fertilizer industry calls for support: Q&A
London, 17 July (Argus) — As the EU gears up to install a new European Commission for 2024-2029, LAT Nitrogen's chief executive officer Leo Alders tells Argus political support remains necessary to tackle a range of challenges threatening EU industry, including subsidised US ammonia production with carbon capture, use and storage (CCUS), and the EU's 'unrealistic' goal of cutting net greenhouse gas (GHG) emissions by 90pc by 2040. But Alders sees growing political "goodwill" to help EU industry against cheap fertilizer imports from Russia, which are used to fund the country's war against Ukraine. Edited highlights follow. What does the fertilizer industry want from the next European Commission? Clear points are effectively releasing emissions trading system (ETS) funds for converting the industry to green fertilizers. We also want carbon sequestration to be allowed as it is in the US. And we need a policy on nutrient efficiency, which has never really happened. For us, too, spillage is not the desired objective. The international context, too, is important. Grey ammonia produced in Europe could move to the same cost levels as US blue ammonia with subsidised CO2 sequestration. If or when that happens, then Europe will see massive imports of US blue ammonia. We think that by 2027 or 2028, volumes coming out of the US will grow exponentially. That's a trend that we think is unstoppable. The underlying issue, of course, is that energy in Europe is at higher price levels than on any other continent. We need to stay in Europe with our production capacity. But the threat is there. Are 90pc GHG cuts by 2040 feasible for you? When discussing the ETS measures, the carbon border adjustment mechanism, and so on, we took a positive approach as an industry. And we go alon g with the zero [carbon] target for 2050. That's all right. But now the [2040] target is not official, more a desired milestone that emissions will be cut by 90pc by 2040. As an industry, we think that target is totally unrealistic and cannot support it. That's a clear point of view. Converting to a green industry will require massive capital. Technologically, it takes time to do all of this. Is the ETS working well for the fertilizer industry? Proceeds from ETS certificates go partly to national budgets and partly to the EU budget. That's all nice. But our industry needs to invest massively to complete the transition. We pay massive amounts of money for CO2 certificates. There was the promise that national and EU levels would subsidise decarbonisation projects from the ETS. In reality, we've seen very few subsidies materialising. So we actually have a counter-proposal: why not allow the industry to park the money for green investments? In theory, the national level is obliged to reinvest 50pc of ETS income back into the industry. The reality is different. Isn't the EU still wary of prohibitive €100-150/t tariffs on Russian fertilizers? A ban on Russian fertilizer imports would require unanimity. Tariffs, though, require majority support among EU states. That seems feasible. At least 15 states appear to support the idea. There is actually no supply issue. We don't have any issues replacing Russian volumes. There may be a possible time element and rebalancing in the first three or four months. But after that, the European industry would be fully capable of supplying our farms. So political support is growing? More and more people understand how Russian gas is being transformed into fertilizer. They've understood that routing gas to Europe is becoming more and more difficult. The EU has been totally unsuccessful in pushing back against Russian urea, so Russia is building some 650,000 t/yr in extra capacity, expected on line next year or thereafter. As an industry, we don't want to be shutting down units in Europe because of cheap subsidised Russian fertilizers. And then, what happens if one day Russia decides to cut or weaponise fertilizer supplies? By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Yara to supply PepsiCo with reduced-carbon ferts
Yara to supply PepsiCo with reduced-carbon ferts
London, 17 July (Argus) — Norwegian fertilizer producer Yara has signed an agreement to supply global food and beverage manufacturer PepsiCo with 165,000 t/yr of fertilizer using feedstock from Yara's renewable and CCS ammonia production projects. The agreement stipulates Yara will work towards supplying PepsiCo with fertilizer products exclusively from Yara's ‘Climate Choice fertilizers' range by 2030. The length and start date of the supply agreement were not disclosed. Yara's Climate Choice fertilizers range will include nitrate fertilizer products which are produced using ammonia from the company's 20,000t/yr renewable ammonia plant in Porsgrunn . The plant began commissioning earlier this year. The range will also include products using ammonia feedstock from Yara's carbon capture and sequestration (CCS) production project at Sluiskill , which is expected to begin CCS operations in 2026. The range also includes Yara's premium nitrate-based fertilizer products, with which newer catalyst technology results in carbon footprint reductions when compared to older production plants. The carbon footprint of the ammonia feedstock will vary dependent on these production pathways. Porsgrunn ammonia can produce nitrate mineral fertilizers with a 70-90pc carbon reduction when compared to fossil-fuel natural gas production pathways. Argus estimates nitrate fertilizers require 0.26-0.43t ammonia per tonne of nitrate product on average (see table). The ammonia consumption rate varies on the nitrate product concerned, and whether it is technical or fertilizer grade. Argus estimates Yara's supply agreement with PepsiCo could equate to a requirement of around 43,000-71,000t of ammonia. Yara has signed similar agreements with other agriculture companies within Europe. In January the company signed an agreement with Nordic grocery chain Reitan Retail, Norwegian agriculture co-operative Felleskjopet Agri and Norwegian milling group Norgesmollene, to supply the consortium with nitrate-based fertilizer products with a reduced carbon footprint. And in 2023 Yara signed a similar agreement with German flour producer Bindewald, Gutting Milling Group and German bakery Harry Brot. Pricing structures for the agreements have so far not been disclosed, but the producer is expecting a premium for the low-carbon attributes of its finished fertilizers, especially once the EU's Carbon Border Adjustment Mechanism (CBAM) becomes operational in 2026. Once CBAM is applied, the increased cost for more carbon-intensive products will determine the achievable premium for lower-carbon nitrate fertilizer, the company expects. By Lizzy Lancaster Tonnes ammonia per tonne nitrate product AN (technical grade) 0.41 AN ( fertilizer grade) 0.43 CAN 0.34 AS 0.26 Argus Average ammonia feedstock estimates, actual rates vary by country. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japanese firms start truck-to-ship ammonia bunkering
Japanese firms start truck-to-ship ammonia bunkering
Osaka, 17 July (Argus) — A Japanese cross-industry group has started trial supplies of fuel ammonia to a tugboat from a tanker truck, ahead of an official commissioning scheduled for late August. The group comprises shipping firm NYK Line and its subsidiary Shin-Nippon Kaiyosha, power producer Jera and ammonia producer Resonac. The companies have jointly studied the possible setting up ammonia bunkering for tugboats since December 2023. Jera supplied the marine ammonia to NYK on 17 July to fuel the NYK-owned tugboat A-Tug at Yokohama port. The ammonia was transported by a tanker truck and fuelled by truck-to-ship operations, which the group said is the world's first attempt. A-Tug is expected to begin normal operations in late August, behind an initial target of June because of technical delays. Jera after the commissioning will supply the marine ammonia to Shin-Nippon Kaiyosha, which will be in charge of operating the tugboat at Yokoyama and Kawasaki ports in Tokyo bay. Jera is buying from Resonac an unspecified volume of low-carbon ammonia, which is partly derived from waste plastics. Ammonia consumption of the tugboat was undisclosed. But bunkering is scheduled to be done twice a month by an 8-10t tanker truck, Jera said. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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Fertilizer Matters: Carbon Border Adjustment Mechanism, Feb 2024
WhitePaper - 24/02/01US Gulf primed to become key ammonia export region
Substantial growth in US Gulf ammonia exports is changing trade flows in the Americas, with additional export capacity due to come on line. This white paper explores these developments, their impact, and addresses whether new price mechanisms are needed to reflect this latest shift in market dynamics.
Podcast - 24/01/31Fertilizer Matters: Red Sea fertilizer logistics Jan 2024
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