Lacklustre Demand from the Fertilizer Sector Led to a Slump in Ammonium Nitrate Prices in Europe and USA

Throughout July 2023, the Ammonium Nitrate prices within the European and North American regions exhibited a notably pessimistic trajectory. The prevailing trajectory was mainly attributed to a significant downturn in prices of essential feedstock Ammonia and upstream Natural Gas. Additionally, depreciating demand from the end-user fertilizer market further supported the current prevailing price trend. Further, a continuous slump in energy prices in the European region contributed to the declining price trend of Ammonium Nitrate.

As indicated by the US Bureau of Labor and Statistics, the United States of America has reduced its exports this year significantly due to various reasons. A significant drop in the water level of the Mississippi River due to high temperatures has led to less number of cargoes of fertilizers, including Ammonium Nitrate, arriving at New Orleans and Texas ports. Further, amidst growing inflationary pressure and global economic slowdown country has decided to reduce its exports leading to a situation of oversupplies in the country. Further, since the country is experiencing a condition of severe drought and grasshopper attacks, farmers have decided to delay the farming season. This, coupled with the ample availability of material in the country, paved the way for narrowed demand-supply fundamentals. However, a revision in procurement orders for Ammonium Nitrate from importing countries was observed during this period. Consumers from India returned to the market to make bulk purchases for the forthcoming winter season.

In a similar manner, in European Region, the prices of Ammonium Nitrate are for a prolonged period—several factors attributed to this decline, including sluggish demand from the end-user fertilizer sector. Since the region's peak planting season has passed, demand from the regional market has depreciated during this period. However, a slight revision in procurement orders from other economies was observed. However, since Russia has pulled off from the year-long grain deal, exports to other countries have been reduced, leading to stockpiled inventory in the regional market. Further, a downturn in feedstock Ammonia and energy prices in the region has also supported the declining price trend of Ammonium Nitrate.

Furthermore, Eurostat's reported Industrial Producers Price Index has demonstrated an enduring decline. June 2023 saw a 0.4% decrease from May, with projections indicating the trend's persistence. Sustained limited demand for Ammonium Nitrate among end-users has led to market abundance. In response, traders have moderated prices due to the prevailing surplus supply of Ammonium Nitrate and weakened demand conditions.

According to data from ChemAnalyst, a notable alteration in Ammonium Nitrate prices is foreseen in the upcoming months, with expectations of an upward trajectory in both the European and North American regions. Anticipated consumer purchases following the harvesting season in North America are poised to contribute to this price surge. Furthermore, the escalating cost of feedstock Ammonia is likely to be an additional factor driving the upward trend in Ammonium Nitrate prices. In a related context, the withdrawal of Russia from a grain agreement has engendered substantial apprehensions concerning supply chain disruptions.