Global nitrogen fertilizer is difficult to live high

Under the influence of factors such as tight supply and continued soaring production costs leading to the closure of marginal manufacturers, global ammonia prices have reached historical highs, which has also led to the high price of global nitrogen fertilizer. The current situation of abnormal markets has brought severe challenges to European synthetic ammonia and nitrogen fertilizers. Many executives of international nitrogen fertilizer giants believe that at least in the second half of this year, the nitrogen fertilizer market will remain turbulent and the price will still be at a high level.

The international nitrogen fertilizer industry chain remain strong

In early 2021, with the support of strong demand, supply tightening, and rising energy costs, the ammonia price began to strengthen. In August 2021, the price of Tampa ammonia in the United States continued to rise after the price of US $ 625/ton, reaching 990 US dollars/ton in December. This rise lasted until 2022, and it obtained new kinetic energy after the outbreak of Russia and Ukraine in late February. After closing the Ukrainian Black Sea Port and sanctions against Russia's shipping through the Baltic Sea, the global nitrogen fertilizer market has reduced supply by more than 20%. April ammonia prices soared to $ 1425/ton, and the price was adjusted to $ 1,000/ton in May, but the price has been strong, and it has risen to $ 1100/ton in August.

Fertecon, a subsidiary of the S & P Global Agricultural Comprehensive Service Company, released the latest quarterly ammonia outlook report that the global export ammonia supply capacity is about 26 million tons, but it has lost nearly 8 million tons of supply from Russia, Ukraine, Venezuela and Belarus, which is almost impossible to satisfy Reduced global ammonia demand.

In the first half of the year, the performance of the fertilizer company also showed that the current market environment of ammonia and nitrogen fertilizers is very strong.

The world's largest synthetic ammonia manufacturer and a CF industry report with a production capacity of 9.5 million tons/year stated that the adjustment of the pre -amortization (EBITDA) after the adjustment of the interest tax in the first half of the year was 3.6 billion US dollars, an increase of 261 from US $ 997 million in the same period last year. %; Total sales revenue was US $ 6.26 billion, an increase of 137%year -on -year. Yaji International is the world's second largest synthetic ammonia producer, with a production capacity of 7 million tons/year. In the first half of the year, EBITDA was US $ 2.82 billion, an increase of 107%year -on -year. Although sales decreased year -on -year, its strong pricing promoted sales revenue by 74%to $ 12.4 billion. Nutrien reports that the nitrogen fertilizer business department in the first half of the year EBITDA was US $ 2.235 billion, an increase of 161%over US $ 855 million in the same period last year; sales revenue was US $ 3.342 billion, an increase of 115%year -on -year. The Dutch OCI report said that the nitrogen fertilizer department in the first half of the year EBITDA was US $ 1.969 billion, an increase of 152%year -on -year from $ 782 million; sales revenue increased by 128%year -on -year to $ 4.665 billion. The sales of nitrogen fertilizers reflect the ammonia market, especially the European ammonia market.

International giants began to reduce ammonia output

Due to the high cost of natural gas and insufficient supply, even if the price of ammonia rises, the international nitrogen fertilizer giants in Europe are cutting out ammonia output. OCI CEO Ahmed Elhos said: "Due to the high price of natural gas, many European manufacturers cannot recover their cash costs, especially those who cannot import synthetic ammonia as substitutes."

OCI's synthetic ammonia production capacity is 3.9 million tons/year, of which 1 million tons/year is located in Heron in the Netherlands. OCI said that due to the surge in European natural gas costs, the company cuts the ammonia production of Dutch Heron to 40%. The company offsets the reduction of Herlan ammonia from foreign business and third parties, so the supply is still normal. Elhos added: "We can operate downstream production under the condition of profit in Europe. At the same time, we continue to provide necessary nitrogen fertilizers to European agricultural customers and provide nitrogen products to industrial customers. In the current environment, the latter is particularly important. "

58%of Yazhong International's ammonia capacity is located in Europe. The company's natural gas cost in the first half of 2022 reached US $ 30.8 per million British thermal units, an increase of 389%year -on -year. Although the company's natural gas costs in synthetic ammonia factories in North America, India, Australia, and South America are not so high, the company's global average natural gas cost is still US $ 21.7 per million British heat units, an increase of 244%year -on -year. Yaji International has cut off several European production plants, involving an ammonia capacity of 1.3 million tons/year and 1.7 million tons/year of finished chemical fertilizer.

Other European producers include Nordic chemicals, BASF, Spanish fertilizer group Fertiberia, Hungary NitrogenMuvek, and Romanian fertilizer producer Azomures also reduced nitrogen fertilizer output.

Price of nitrogen fertilizer may continue to maintain a high level

For the forecast of the nitrogen fertilizer market in the future, all nitrogen fertilizers believe that the price of nitrogen fertilizer will still be maintained.

CF Industrial CEO Anthony Will said that the price of nitrogen fertilizer will have to rise due to high cost of natural gas. This means that these European and Asian high -cost areas will be limited. Until next spring, the supply of global nitrogen fertilizer products will be very tight, especially in Europe.

Ahmed Elhos predicts that under the current strong market conditions, several structural problems will occur. "For a long time in the future, the price of natural gas in Europe will remain high, and the result must be that more production plants will be closed. We estimate that due to the high price of natural gas in Europe, the current ammonia capacity of 19 million tons/year is about 7 million tons. /Year is in a shutdown state. In view of the risk of Russia's natural gas supply, if the product sales price is still lower than the cost of natural gas production, more production capacity may be closed. Before 2026 In the past five years, it is even more tense. From the mid -term, exports are expected to be lower than 3 million tons per year. "Elhos believes that fertilizer consumption will still be strong because of the decline in grain inventory and increase grain output. Ken Setz, an interim president and CEO of Nutrien, also said that under the support of high price of natural gas in Europe and restricted Russian ammonia exports, the company is expected to rise in nitrogen fertilizer in the second half of the year.

In terms of nitrogen fertilizer supply, despite the high price, high profit margin, and tight supply, no manufacturer announced the plan to build a new synthetic ammonia capacity. FerTecon said that the overall economic uncertainty is one reason, and the current high cost of capital projects is another reason. And the whole society's extensive promotion of decarburization and the enthusiasm of investors in low -carbon projects, the long -term returns of traditional hypertrophic projects are also doubtful. FerTecon pointed out that despite many blue and green projects that have been announced, few people have received investment decisions or funds, and most of them are still in the early stages of development. As a result, the supply of nitrogen fertilizer will still be in a relatively short -short state.

- END -