Ammonia Market Roulette: What to Expect in 2023?

The consistently high volatility of Ammonia pricing in 2022 has been caused by the Russia-Ukraine war and energy-related issues. 2022 was a year of lots of twists and turns in the Nitrogenous fertilizer market, including Ammonia. The cost of natural gas, which is the primary feedstock of Ammonia, has caused some Nitrogen-based fertilizer production facilities in Europe to shut down. Any revival in demand, however, could alter market dynamics in favor of H2 of 2023, and we might experience another bull run in the Ammonia market.

The North American fertilizer price index dropped 30% after rising immediately after the Russian invasion of Ukraine as markets adapted to seasonality and supply. The US market is anticipated to be quite opportunistic, with the potential to keep exporting Ammonia to European nations when those nations run out of supply. On the other hand, it is important to keep an eye on weather-related concerns in 2023 since a hurricane might still emerge because of weather during Q3. The latest development is that the Mississippi River's low water levels make it difficult to carry barges upriver and extend the price gap between New Orleans' coastal and in-market rates. This could lead to worries about supply shortages in 2023.

The European Ammonia fertilizer industry is expected to enter a year of bearing the weight of rising natural gas prices which may impact the demand. Another round of policy changes, which includes the Price cap on Natural Gas for USD 191 (Euro180 per megawatt hour) in the European market, might affect the supplies as Russia is against this move. Consequently, the fertilizer outlook for the EU in the coming months is a mixed story of availability, affordability, and sustainability. Currently, 50% of Ammonia manufacturing facilities are closed, and if prices continue to rise, additional capacity will undoubtedly be lost. On the other hand, winter crops witnessed a minor improvement in harvested quantities because of the hot and dry weather.

As Per ChemAnalyst, the Ammonia market is anticipated to remain bearish in the first quarter of 2023. However, in general, we anticipate that the price of Nitrogen fertilizer will continue to oscillate this year. Natural gas threats in Europe are unlikely to be resolved in the upcoming six months, and they will likely fluctuate during the coming period. The 2023 winter season is anticipated to have high expectations from the Ammonia market, as the demand is usually high during the sowing season. However, the supply of gas in Europe might face even greater difficulties next winter.