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Ammonia Prices Up in Europe and Asia Amid Supply Constraints Despite Fluctuating Demand
Ammonia Prices Up in Europe and Asia Amid Supply Constraints Despite Fluctuating Demand

Ammonia Prices Up in Europe and Asia Amid Supply Constraints Despite Fluctuating Demand

  • 23-Aug-2024 3:34 PM
  • Journalist: Yage Kwon

Prices for Ammonia in the European and Asian markets are different in the first half of August 2024. The increase in commodity prices, especially natural gas, has increased significantly production costs and rising Ammonia costs. At the same time, the European market is suffering from significant shortages due to low production, labor shortages exacerbated by the summer holidays, and a shortage of essential raw materials. These problems were compounded by trade uncertainty and export delays, which led to higher import prices and disrupted supply chains. Despite these pressures, domestic Ammonia demand in Europe continues to remain inconsistent due to adverse weather conditions affecting agriculture and lower demand for bottom crops. At the same time, in the Asian market, prices were almost constant, although a slight uptick was observed owing to firm export demand.

Ammonia prices surged in the European region by a significant margin during the period under review. This increase was closely linked to a significant rise in the prices of essential feedstock, which in turn led to higher production costs and exerted upward pressure on Ammonia prices. According to insights from various market participants, the supply of Natural Gas in the region has declined by 0.5% this week. This decline is primarily due to Ukraine’s incursion into Russia’s Kursk region, where the critical Sudzha gas transit station is located. The disruption at this key transit point has had a ripple effect on European gas supplies, further exacerbating the regional shortage of Natural Gas. The severe shortage of this crucial raw material has directly impacted Ammonia production, leading to lower output levels and contributing to a surge in Ammonia prices.

Nevertheless, the demand for Ammonia in the domestic market remains inconsistent. The EU domestic market has been notably impacted by weather conditions, including substantial rainfall in United Kingdom, France, Italy, Germany, and the Netherlands. Such weather patterns have adversely influenced crop growth and hindered agricultural production across the region and its neighboring areas. The challenges posed by unpredictable weather conditions have introduced uncertainty into the agricultural sector, with the effects being most pronounced in the demand for Ammonia.

Similarly, in the Asian market, Ammonia prices have remained relatively stable, with a slight increase of USD 5/MT observed during the week on August 16th. This marginal rise can be attributed to several factors, including increased export interest from prominent international markets particularly South America and South Korea. Market insights indicate that numerous suppliers have already committed to shipments for August, with some also securing bookings for mid-September cargoes, suggesting a tight supply situation. Additionally, the market has been influenced by rising domestic demand and the impending scheduled maintenance of several Ammonia production plants, which are expected to restrict supplies further. The complex interplay of these supply constraints and strong demand has widened the disparity between supply and demand, thus contributing to the recent price increase in the Chinese market.

According to ChemAnalyst, Ammonia prices are expected to increase in the coming months due to a shortage of raw materials and a predicted resurgence in demand.

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