Ammonia prices rally upwards with Fertilizer sector eroding

Ammonia prices continue to increase in the third week of March due to scarcity in supplies. Following a request from Russia's Commerce Ministry, fertilizer exports from the United States have been restricted. Higher Natural Gas prices decreased Chinese supplies, and weather-related production challenges in the U.S., came together in March to limit fertilizer supplies in the U.S., impacting Ammonia pricing. The situation in Ukraine, on the other hand, has gotten worse. Furthermore, downstream derivatives such as Urea and Potash have gradually raised the demand for Ammonia. According to the ChemAnalyst database, Anhydrous Ammonia FOB New Orleans prices were USD1380/MT this week, while CFR Tampa prices were USD1165/MT.

As the spring planting season approaches, U.S. farmers face sky-high fertilizer prices, but their supply may be more secure than that of Brazilian farmers because of Russia's economic sanctions. Most key fertilizer prices were higher in mid-March than they were a month before the invasion. Tariffs on fertilizers are also being questioned as fertilizer prices and supply are causing concern around the world.

Russia and Ukraine are both significant Ammonia and fertilizer exporters, and Russia's invasion has caused global markets to be disrupted. Fertilizers and other input costs are at an all-time high, and the war in Ukraine threatens to drive up prices even further.

'Yara,' a Norwegian worldwide Ammonia producer, announced on March 11 that it has halted purchasing supplies from any Russian enterprises linked to E.U. sanctions. Due to increased gas prices, Yara had previously reduced fertilizer production at two European sites. This action is expected to significantly affect European Ammonia markets, which have already lost Black Sea shipments due to the shutdown of the Yuzhny port and pipeline during Ukraine's conflict, generating a considerable Ammonia market disruption.

As per ChemAnalyst, "Fertilizer prices are four to five times more than they were this time last year. Given the enormous volatility seen by farmers and ranchers in recent years. The United States must avoid introducing unneeded tariffs that further restrict fertilizer supply or boost raw material prices such as Ammonia."