Ammonia Prices Surge Globally Amidst Reviving Demand and Increasing Natural Gas Costs

During the second half of September 2023, the global Ammonia market witnessed a price surge. This price increase can be attributed to several factors, including the rising costs of its vital raw material, natural gas, a resurgence in demand for its downstream products, and disruptions in the supply chain, particularly affecting urea production.

In the European region, Anhydrous Ammonia witnessed a consistent uptick in price, which can be attributed to robust demand from the end-user fertilizer market and the increasing price of essential feedstock Natural Gas. During the second half of September 2023, there were problems with Norwegian offshore gas facilities that had just finished maintenance. This and less gas going to the US Gulf Coast increased gas prices. Consequently, European Ammonia producers feel more pressure to buy gas from other countries than make it themselves. Regarding demand, international market participants were active in the Russian market after China curtailed its exports of fertilizers, including Ammonia. This has led to a depleted material availability in the domestic market, gradually increasing Ammonia prices within the country. Henceforth, the Russian government imposed export duties on fertilizers, including Ammonia, to curb the price hike. Further, demand for Ammonia from the downstream fertilizers industry was firm during this week amidst the ongoing Wheat and Barley planting season within the region. These factors combined paved the way for a widened demand-supply gap, prompting the increasing price trend.

In Saudi Arabia, the Ammonia market saw a significant price rise, primarily driven by the increasing costs of its feedstock Natural Gas. Further, there was steady demand for Ammonia from domestic and international markets. With China imposing an export ban, Indian consumers have become active players in the Saudi Arabia and USA markets. Additionally, the unplanned shutdown of a Ma'aden plant has created a lot of uncertainty in the market. This has led to a shortage of material in the market. Collectively, these factors have contributed to the price surge.

In the USA, Ammonia prices in the North American region experienced a notable increase. Initially, there was a high demand for Ammonia from the domestic and international fertilizer markets, driven by the impending winter planting season. However, as the month progressed, a noticeable decrease in international market inquiries, notably from Brazil, became apparent. Buyers' hesitance to commit to large-scale purchases began to weigh on import prices, signifying a continued softening of the Western market. On the supply side, an abundant quantity of Ammonia was available to meet the needs of end-users.

Moreover, the Bureau of Labor Statistics data revealed a significant 19.1% surge in imported natural gas prices in August 2023, with expectations of a continued upward trajectory. This rise in upstream natural gas prices consequently elevated the production cost of Ammonia. Additionally, the country's Consumer Price Index (CPI), as reported by the same source, indicated a 0.6% increase in August, with a minor 0.1% uptick noted in the Natural gas index.

As per ChemAnalyst, Ammonia prices are anticipated to increase globally in the forthcoming months. The price rise can be attributed to the heightened costs of feedstock Natural gas. Additionally, firm demand from the downstream fertilizer industry is anticipated to stay robust in the coming months.