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Released September 06, 2022 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--European ammonia and fertilizer production has taken numerous serious hits over the past week as major producers have cut production due to rocketing gas prices.
All of the firms blamed escalating gas prices linked to Russia's invasion of Ukraine.
Norway's Yara International (Oslo, Norway), one the world's largest makers of fertilizer, confirmed that it would be making additional cuts in ammonia production, bringing its capacity to just 35% of normal. The company stated: "As a result of record high gas prices in Europe, Yara is implementing further curtailments which will take its total European ammonia capacity utilization to around 35%. With this, Yara will have curtailed an annual capacity equivalent of 3.1 million tonnes ammonia and 4.0 million tonnes finished products (1.8 million tonnes urea, 1.9 million tonnes nitrates and 0.3 million tonnes NPK (all-purpose fertilizer) across its production system in Europe.
Yara will where possible use its global sourcing and production system to optimize operations and meet customer demand, including continued nitrate production using imported ammonia when feasible. Yara will continue to monitor the situation and adapt to market conditions going forward." Last September Industrial Info reported that the company, which is responsible for around one-third of the world's fertilizer production, announced that it was cutting its European production by 40% due to record gas prices. For additional information, see September 21, 2021, article - Soaring Gas Prices Hit European Chemicals and Steel Sectors.
Yara is not the only European fertilizer maker to announce similar cuts recently. The U.K. arm of CF Industries Holdings (NYSE:CF) (Deerfield, Illinois) announced that it is temporarily halting ammonia production at its Billingham Complex due to market conditions. Instead it plans to use the site's capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants. It assured customers that it will fulfill all ammonia and nitric acid contracts and all orders of AN contracted for delivery in the coming months. It stated: "At current natural gas and carbon prices, CF Fertilisers U.K.'s ammonia production is uneconomical, with marginal costs above £2,000 (US$2,332) per tonne and global ammonia prices at about half that level. The current cost of natural gas at NBP (National Balancing Point) is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead."
The planned halt for ammonia production will also impact carbon dioxide (CO2), a byproduct of ammonia production. In June, CF Industries (Deerfield, Illinois) announced it was shutting one of its two U.K. plants as part of a company-wide restructure, leaving Billingham as its only operation. The plant is the largest ammonia, ammonium nitrate (AN) and CO2 production facility in the U.K. For additional information, see June 26, 2022, article - CF Fertilisers Shuts One of Two U.K. Plants.
Poland's largest chemicals company, Grupa Azoty SA, has also opted to temporarily shut down its nitrogen (N) fertilizer production units due to record natural gas prices. "As a consequence of record high natural gas prices, Grupa Azoty SA temporarily stops installations for the production of nitrogen fertilizers, caprolactam and polyamide 6. Since Russia's aggression against Ukraine on February 24, 2022, we have observed extraordinary, historically high natural gas prices on European stock exchanges. Gas prices in the last six months increased almost fourfold."
According to Chris Lawson, head of fertilizers, with analysts CRU Group: "There has been a spate of production curtailments announced across Europe this week. With these most recent developments, we now have confirmation that 50% of total European ammonia capacity (excluding Ukraine) is shuttered or curtailed, up from 26% the week prior." CRU also stated that Europe's nitrogen production capacity is down by 33%.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
All of the firms blamed escalating gas prices linked to Russia's invasion of Ukraine.
Norway's Yara International (Oslo, Norway), one the world's largest makers of fertilizer, confirmed that it would be making additional cuts in ammonia production, bringing its capacity to just 35% of normal. The company stated: "As a result of record high gas prices in Europe, Yara is implementing further curtailments which will take its total European ammonia capacity utilization to around 35%. With this, Yara will have curtailed an annual capacity equivalent of 3.1 million tonnes ammonia and 4.0 million tonnes finished products (1.8 million tonnes urea, 1.9 million tonnes nitrates and 0.3 million tonnes NPK (all-purpose fertilizer) across its production system in Europe.
Yara will where possible use its global sourcing and production system to optimize operations and meet customer demand, including continued nitrate production using imported ammonia when feasible. Yara will continue to monitor the situation and adapt to market conditions going forward." Last September Industrial Info reported that the company, which is responsible for around one-third of the world's fertilizer production, announced that it was cutting its European production by 40% due to record gas prices. For additional information, see September 21, 2021, article - Soaring Gas Prices Hit European Chemicals and Steel Sectors.
Yara is not the only European fertilizer maker to announce similar cuts recently. The U.K. arm of CF Industries Holdings (NYSE:CF) (Deerfield, Illinois) announced that it is temporarily halting ammonia production at its Billingham Complex due to market conditions. Instead it plans to use the site's capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants. It assured customers that it will fulfill all ammonia and nitric acid contracts and all orders of AN contracted for delivery in the coming months. It stated: "At current natural gas and carbon prices, CF Fertilisers U.K.'s ammonia production is uneconomical, with marginal costs above £2,000 (US$2,332) per tonne and global ammonia prices at about half that level. The current cost of natural gas at NBP (National Balancing Point) is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead."
The planned halt for ammonia production will also impact carbon dioxide (CO2), a byproduct of ammonia production. In June, CF Industries (Deerfield, Illinois) announced it was shutting one of its two U.K. plants as part of a company-wide restructure, leaving Billingham as its only operation. The plant is the largest ammonia, ammonium nitrate (AN) and CO2 production facility in the U.K. For additional information, see June 26, 2022, article - CF Fertilisers Shuts One of Two U.K. Plants.
Poland's largest chemicals company, Grupa Azoty SA, has also opted to temporarily shut down its nitrogen (N) fertilizer production units due to record natural gas prices. "As a consequence of record high natural gas prices, Grupa Azoty SA temporarily stops installations for the production of nitrogen fertilizers, caprolactam and polyamide 6. Since Russia's aggression against Ukraine on February 24, 2022, we have observed extraordinary, historically high natural gas prices on European stock exchanges. Gas prices in the last six months increased almost fourfold."
According to Chris Lawson, head of fertilizers, with analysts CRU Group: "There has been a spate of production curtailments announced across Europe this week. With these most recent developments, we now have confirmation that 50% of total European ammonia capacity (excluding Ukraine) is shuttered or curtailed, up from 26% the week prior." CRU also stated that Europe's nitrogen production capacity is down by 33%.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
