U.S. Gulf/Tampa:
As expected, Tampa ammonia prices moved up. August was concluded at $1,100/mt CFR, a jump from July’s $960/mt CFR. Sources attributed the uptick to tighter supplies and less production in Europe due to limited gas availability.
As a result, ammonia from the U.S., Trinidad, and other producers are being sourced to fill in production gaps in Europe.
Eastern Cornbelt:
CF announced new 4Q prepay pricing for ammonia early on July 27 at $985/st FOB in Indiana and $980/st FOB in Illinois, up from recent 3Q fill offers at $950/st FOB in Illinois and Indiana. The order book for 3Q shipments is still reportedly open.
New pricing FOB Lima, Ohio, was confirmed at $985/st FOB for prompt or prepay tons, up from last week’s $950/st FOB.
Western Cornbelt:
CF’s 4Q prepay program for ammonia, launched on July 27, included $950/st FOB Palmyra, Mo., $940/st FOB terminals in eastern Iowa, $900/st FOB Port Neal, Iowa, and $875/st FOB Verdigris, Okla. Those levels are up from recent 3Q fill offers at $825/st FOB Port Neal and Verdigris. The order book for 3Q shipments is still reportedly open.
California:
Anhydrous ammonia postings from Calamco remained at $1,147/st DEL in California, with aqua ammonia posted at $301/st FOB Stockton.
Pacific Northwest:
A slight increase was reported for ammonia in the Pacific Northwest, where the latest offers were quoted at $940/st FOB truck terminals and $970-$1,000/st DEL, up from the previous $910-$930/st FOB and $930-$950/st DEL ranges. Another increase is expected on Aug. 1.
Aqua ammonia pricing moved up $5/st, to $245/st FOB in the region.
Western Canada:
The last offers for ammonia remained at C$1,320-$1,340/mt DEL for fall tons in Western Canada, depending on location and supplier.
Western Europe:
Higher gas prices are pushing the estimated production cost for ammonia to beyond $2,000/mt. Sources said, however, that the actual price of ammonia, while higher than previous years, is nowhere near that level.
European ammonia production is using natural gas purchased at lower levels more than a month ago. Sources are saying the actual production cost for ammonia is in the $1,200s/mt, but heading up.
Even with production costs up, the ammonia price out of Antwerp is pegged at $1,200-$1,250/mt C&F. Traders said imports from around the world are keeping the Northwest Europe price in check. The impact of imported ammonia has producers telling the world it is cheaper to import than to produce, so that is what they will do.
Material is coming into Northwest Europe from Asia, the Arab Gulf, North Africa, and the Caribbean. Sources said even with higher freight rates and rising netback requirements from producers, the plentiful supply of ammonia around the world makes sales into Europe possible.
Sources noted that the increased interest in importing ammonia means less of the limited natural gas entering Europe will have to be diverted to industrial use. The E.U. agreed on July 26 to cut demand for gas by 15% during the next eight months. Bloomberg reported the move came as Gazprom announced it was cutting gas supplies to the E.U. to 20% of its pipeline capacity.
The decisions have led European countries, especially Germany, to limit natural gas use during the summer and fall so that reserves can be built up for winter use. Any reduction in use by industries, said one ammonia trader, is probably welcome news to the government planners.
Middle East:
Despite protests to the contrary by producers, sources said there is plenty of ammonia available in the region. Queries to producers in the low-$900s/mt FOB are usually rebuffed with a comment on how all producers are sold out for the next 45-60 days.
A bid at a higher level, with some flexibility in shipping times, usually gets a positive response for further talks.The lack of any new spot deals leaves prices at $900-$950/mt FOB.
Southeast Asia:
An explosion at Kaltim V on July 23 closed its ammonia and urea production. The plant had a rating of 900,000 mt/y of ammonia and 1.2 million mt/y of urea.
Kaltim reportedly told urea traders that the plant would be down for 3-4 months. Asian traders estimate the downtime will be more like 6-8 months. Ammonia traders said the most likely scenario will be a shutdown lasting 4-6 months. One trader said that whatever the time, ammonia will be short in Asia. He added that the continued softening of demand in the region will take some of the sting out of the shortage.
About half of the ammonia production at Kaltim V went to its urea facility. With the urea operations also closed, the loss of the ammonia output will only affect the tons dedicated to other domestic buyers use and exports.
The average monthly exports of ammonia from all producers for January-May 2022 were calculated at 166,000 mt from Trade Data Monitor numbers. Sources estimated the Kaltim V closure could eliminate 15,000-25,000 mt from the global marketplace each month.
So far, buyers in Asia have not reacted to the situation. Sources said demand has been slowing down as the global economy retracts. The loss of the Kaltim tonnage may slow down expectations of softer prices in the region.
The loss of the Kaltim tons might also affect supplies in Morocco and Northwest Europe. Buyers for OCP and in Europe have picked up cargoes from Indonesia to make up for some of the losses experienced when Russian ammonia was cut off from the Black Sea and Baltic ports. India will also be hit.
Sources reported that China appears to be stepping up ammonia exports. While Trade Data Monitor reported only 17,000 mt exported in the first half of the year, this compares to annual export rates of 1,000-3,000 mt in the past four years. A recent sale of 18,000 mt at $750/mt FOB was sent to India and is being unloaded this week.
There are also reports of another cargo of 18,000 mt being assembled in China, with a stop off in Indonesia for another 7,000 mt for a buyer in Northwest Europe.With freight from China and Indonesia to Antwerp estimated at $200-$250/mt and a price of $750/mt FOB, sources said buyers will still be able to make money in the European market.