October 2023 Sees a Surge in Nitric Acid Prices in US and European Markets Amidst Supply Chain Constraints

In October 2023, there was a significant price increase in the Nitric Acid market in the European and North American regions. This price surge was mainly due to a constrained global supply of the material, elevated prices for essential feedstock components like Ammonia, and increased costs in the upstream Natural Gas sector.

The Nitric Acid import market in Germany witnessed a substantial price increase, and several factors contributed to this surge. The primary driver was the escalating prices of critical feedstock materials like Ammonia and upstream Natural Gas in European exporting nations and limited material availability. This was exacerbated by a bullish trend in the European gas hubs, leading to the region's restricted production of Ammonia and its derivatives, including Nitric Acid. Producers were cautious about expanding production due to the rising costs of feedstock. In addition, BASF, a leading European chemical manufacturer, has declared a decrease in production speeds and the shutdown of multiple energy-consuming units. This includes two crucial Ammonia factories and associated fertilizer operations. This decision resulted in a shortage of materials in the German market, prompting German manufacturers to turn to imports from the US market. The weaker Euro compared to the US Dollar also contributed to the increased costs of Nitric Acid imports in the German market. Further, the increasing demand for a major downstream derivative, Aniline, exerted upward cost pressure on Nitric Acid prices.

Additionally, the persistent turmoil in Ukraine, especially the dispute with Russia, has profoundly affected the production and distribution of fertilizers. Stakeholders in the fertilizer market are presently grappling with obstacles as the Russian incursion into Ukraine has resulted in an abrupt halt of fertilizer shipments, including Nitric Acid, at the principal export center of Yuzhny. This geopolitical situation has further exacerbated the supply constraints in the Nitric Acid market.

In the North American region, there has been a persistent shortage of Nitric Acid in many areas, posing challenges in meeting the increasing demand in certain regions. This shortage is further exacerbated by issues in Trinidad, the primary exporting country of the crucial feedstock Ammonia, where a lack of natural gas supply for several weeks has led to constrained Nitric Acid production in the region. Manufacturers have been wary about increasing their production capabilities due to the escalating expenses associated with feedstock. Moreover, various market participants have reported strains on the transportation infrastructure in the US during this week, including low water levels in the Mississippi River, shortages of railcars, and limited truck availability. These collective factors have contributed to a shortage of Nitric Acid supplies in the US market.

According to ChemAnalyst, it is anticipated that Nitric Acid prices will experience a global increase in the coming months. This price surge can be attributed to the tight supply situation in the global market and the elevated prices of essential feedstock Ammonia and upstream natural gas. The challenges in Nitric Acid production and transportation infrastructure are likely to continue affecting the market, leading to price increases.