End-Users Breathe a Sigh of Relief as the Ammonia Price Trend Reversed
- 25-Apr-2022 2:46 PM
- Journalist: Jacob Kutchner
Ammonia prices have been going up in the global market for a long time due to higher natural gas prices, but in the last week, upstream Nitrogen prices have plummeted, bringing relief to farmers and downstream consumers all over the world. The slower demand and increased production activities have dragged Ammonia pricing downwards. In the wake of reduced demand from the downstream consumers, Ammonia values have plunged by a significant level in the last week.
Since the beginning of the last quarter, Ammonia prices have been on an upward rally due to the repercussions faced by manufacturers amidst the COVID-19 pandemic coupled with the Russia- Ukraine war, which has raised the input prices, influenced by uncertain geopolitical tendencies. High fertilizer costs had created worry for farmers and agriculture ministries around the world ahead of the spring planting season. Following Russia's invasion of Ukraine, countries had been scurrying to locate new dependable suppliers of essential fertilizers and their components. However, as soon as the production ramped up in the face of the spring planting season, the prices fell to around USD1480/MT from around USD 1600/MT, showcasing a decline of $120/MT in the USA.
A measure of pricing for the Nitrogen fertilizer Ammonia in Tampa plunged more than 12% on Friday, the highest since 2019, as high prices have hindered industrial demand, with customers in Southeast Asia cutting back on contracted volumes. Furthermore, few halted Ammonia production in Europe has resumed, perhaps alleviating some market pressure. The rise "appears to be taking a breather" in the second quarter as fertilizer consumption moves from the Northern to the Southern Hemisphere.
As per ChemAnalyst, "The price of Ammonia is extremely volatile, and upstream pricing trends heavily influence it. As a result, any change in upstream Natural Gas and nitrogen pricing will be attributed to a substantial swing in the Ammonia market. Therefore, it is expected that this breather will not continue long, and Ammonia will likely resume its upward trajectory in the coming week."