US Ammonia Market Faces Stability, Prices Surge in Europe Amidst Supply Chain Disruption

Anhydrous Ammonia prices surged in the European market in the second half of November 2023. The primary factors contributing to this decrease were the increasing price of essential feedstock Natural Gas and supply shortages. Concurrently, prices remained stable during this period, attributed to moderate demand from the end-user fertilizer market, particularly during the Wheat planting season in the region.

In the European region, Anhydrous Ammonia prices experienced a substantial increase in the latter part of November 2023. The escalation in the cost of crucial raw material Natural Gas, particularly in major exporting nations like the USA, coupled with a shortage of gas pipelines, prompted producers to exercise caution in expanding Ammonia production. Further, persistent bottlenecks at the Panama Canal have resulted in extended queues for ships, causing disruptions in shipping schedules and a subsequent rise in transportation costs, impacting Ammonia shipments to the European market. This cautious approach among producers reduced Ammonia exports from the USA to the European market. Furthermore, contracted shipments from another major importing country, Trinidad, continued to arrive in the German market. In addition to these factors, the announcement by the Norwegian chemicals company Yara about a temporary halt in Ammonia production for the next two months has the potential to create a surge in spot demand for volumes. This has led to a severe shortage of Ammonia in the European market. Moreover, the robust demand for downstream derivatives such as Urea and DAP within the region further intensified cost pressures on Anhydrous Ammonia prices, supporting the observed price hike during this period. The convergence of these factors prompted the widened disparity between demand and supply in the European market, thus supporting the intensified price of Anhydrous Ammonia.

Contrarily, the Anhydrous Ammonia market has sustained a period of price stagnation following a significant increase in the latter half of November 2023, despite a decrease in the price of essential feedstock Natural Gas during the same timeframe. The demand for Ammonia from the international market remained steady throughout this period, marked by the absence of new bids or inquiries from the international market, as some participants anticipated a further price decline due to limited activity. However, the domestic fertilizer market demand exhibited modest activity, particularly amidst the wheat planting season within the country. On the supply side, ample stocks were available in the market, and the supply chain encountered no significant hindrances, indicating a balanced equilibrium between demand and supply. This scenario has contributed to the prevailing stagnancy in Anhydrous Ammonia prices, emphasizing the delicate balance between market dynamics and participants' expectations during this period.

As per ChemAnalyst, it is anticipated that Ammonia prices may continue to increase marginally in the coming months amidst rising feedstock prices and supply shortages.