U.S. Gulf/Tampa:
The prospect of a July drop in Tampa ammonia prices has lost some of its steam as higher natural gas prices in Europe have started to shutter ammonia production.
Romania’s Azomures announced that it would be taking down ammonia production on June 23. OCI had already announced it was taking down one plant. As a result, market bears may not get as big a drop in price at Tampa as they earlier thought – if any. The June price at Tampa was $1,000 m CFR, down $425/mt from May.
Eastern Cornbelt:
Ammonia prices continued to retract as sidedress demand tapers off in the region. Most regional ammonia terminals dropped to the $1,250/st FOB level for prompt tons during the week in Illinois, Indiana, and Ohio, down from the prior week’s $1,300-$1,375/st FOB range. No summer fill programs were circulating yet during the week.
Western Cornbelt:
With sidedress demand winding down quickly in the region, prompt ammonia prices reportedly fell to $1,250-$1,300/st FOB in the Western Cornbelt, with the low confirmed in Missouri and Nebraska. Sources said they expect a fill program offer in the last week of June.
Northern Plains:
Ammonia pricing slipped to $1,400-$1,425/st FOB in the Northern Plains, down from $1,470-$1,500/st FOB earlier in June. The Velva, N.D., market was quoted at $1,400/st FOB at midweek, with Leal, N.D., pricing reported at the $1,410/st FOB level.
Delivered ammonia pricing ranged broadly at $1,250-$1,440/st in the region, with the low reported late in the week for confirmed new business.
India:
Imports now appear to be limited to only contract tons. Sources said the reduced demand by phosphate producers and other industrial buyers of ammonia is limiting the need for imports.
China:
Imports appear to be limited mostly because of reduced industrial demand, said sources. Phosphate producers seem to be getting what they need to produce DAP and other products, mostly for the domestic market. Industrial buyers, however, are experiencing reduced demand for their products as inflation and higher interest rates affect the global economy.
Imports for January-May 2022 were reported at 100,000 mt by Trade Data Monitor. This is almost 80% down from the 469,000 mt imported during the same period in 2021. The main supplier of ammonia to China in the first five months of the year was Indonesia with 59,000 mt.
May 2022 imports of 9,800 mt showed a dramatic drop from the 54,000 mt imported in May 2021.
Northwest Europe:
The increase in natural gas prices in Europe is hitting ammonia production. The Azomures plant in Romania shut down this week, with additional facilities in Europe expected to follow suit.
The gas price increase came as Russia withheld its natural gas shipments to Europe in retaliation for the sanctions imposed because of its invasion of Ukraine. The German government is reported to be looking at how it will allocate its reduced natural gas supplies.
Sources said one of the measures apparently under discussion is to begin building reserves for the winter months to ensure enough gas for home heating. The government is expected soon to release how it will allocate the distribution of natural gas to the reserves, homes, and industries.
Sources estimated that the new production cost for ammonia is at $1,100-$1,200/mt ex-factory. However, few buyers are expected to pay that price. The results could lead to the closure of more ammonia plants. One trader noted that nailing down an accurate price in the area will become more difficult because of the lack of production.
For now, the estimated price for Northwest Europe is at $1,500/mt C&F, but there has been no new business to confirm that level. Sources calculated the price based on what prices might be because of the higher gas prices or from having to import product from Trinidad or the Arab Gulf.
Middle East:
Even as Europe grows concerned about higher gas prices, production in the Arab Gulf remains steady. Sources said the main markets for the Arab Gulf – India and Southeast Asia – have turned flat as the global economy slows down.The reduced demand for product east of Suez could free up some tons for shipment to Europe.
Demand is reportedly slightly less than supply for the region, prompting industry watchers to call the market steady but soft. A steady flow of product is moving out of the region to contract buyers and to cover swap deals that have occurred in the past year. No new spot deals were reported, leaving the last public price at $900-$970/mt FOB.