BASF and Ukraine’s Odessa Port Plant (OPP) have become the latest European producers to cut ammonia production due to the soaring cost of natural gas. Germany-based BASF on Sept. 27 reported that it was curtailing ammonia production at its production sites in Antwerp, Belgium, and Ludwigshafen, Germany.
“Due to the recent rise in natural gas prices in Europe, the economics for operating an ammonia plant in the region have become extremely challenging,” BASF said in a statement. The company said it will continuously monitor the gas price development and adjust its ammonia production accordingly.
OPP suspended ammonia production on Sept. 30, a day after halting urea production due to the high price of natural gas. According to the Russian news agency Tass, OPP said its gas supplier, Agro Gas Trading, was currently unwilling to supply gas “given its unprofitability, with the price exceeding $1,000 including mark-ups.”
OPP said the increased price of its finished products due to the higher gas prices means they have become “uncompetitive,” adding that all of its storage facilities “are completely packed with urea,” Tass reported. Ukraine’s Odesky Pryportovyi Zavod decided to halt ammonia production on Sept. 22, according to Bloomberg (GM Sept. 24, p. 1).
The recent shutdowns follow reports last week that Vienna-based Borealis AG was curtailing production of ammonia in Europe amid soaring natural gas prices. A company spokesperson told Green Markets on Sept. 23 that Borealis had reduced its production of ammonia and will “further analyze the situation” regarding its plants in Austria, France, and the Netherlands. Borealis AG had no further comment on the potential impact on the company’s downstream production.
Oslo-based Yara International announced on Sept. 17 that it planned to curtail around 40 percent of its European ammonia production capacity within the next week (GM Sept. 17, p. 1). The company told Green Markets on Sept. 20 that it was sourcing ammonia from its plants in Australia, the U.S., and Trinidad to help cover the production curtailments in Europe so it could maintain stable fertilizer production.
Some of the other European producers who have curtailed their ammonia production are believed to be buying ammonia to cover some of their shortfalls. Industry sources estimated that the current price of natural gas means most producers are facing an ammonia production cost of $1,000-$1,100/mt, putting the final product far out of reach for any buyer.
Lithuanian nitrogen fertilizer manufacturer Achema was expected to keep one of its two ammonia units offline after the completion of the summer maintenance program, according to a NewsBase report last week. There have been reports of more European producers reducing ammonia output, but this could not be confirmed directly with the companies by press time.
CF Industries Holdings Inc. on Sept. 21 said it was restarting the ammonia plant at its Billingham, U.K., complex at Teeside after announcing on Sept. 15 that it was halting operations at Billingham and Ince, U.K., in response to high natural gas prices. The restart of the Billingham plant followed an interim agreement reached on Sept. 21 with the U.K. government to cover the costs to restart the ammonia plant and produce CO2 for the U.K. market.
Safely restarting the ammonia plant at the Billingham Complex was expected to take several days. The restart did not include the Ince plant in Cheshire, and the support offered by the U.K. government is only for three weeks.
Meanwhile, operations resumed at Ma’aden Phosphate Co.’s (MPC) ammonia plant at Ras Al-Khair Industrial City on Saudi Arabia’s East Coast on Sept. 29 following the completion of maintenance work at the facility, Riyadh-based Saudi Arabian Mining Co. (Ma’aden) announced in a filing to Saudi Arabia’s stock exchange.
The MPC ammonia plant was shut down on May 20 after encountering a technical problem, which led to a limited fire at the facility (GM May 28, p. 2).