Why has Germany Market been witnessing a consistent Rise in Ammonia Pricing

Entering the month of April, Ammonia prices in Germany have continued the upwards rally with a week-on-week inclination of nearly 2%. Due to limited supplies and strong demand from the downstream fertilizer industries, prices have continued to rise. As most of the world relies on Russian fertilizer exports, and as the situation worsens, upstream commodities like natural gas follow behind. Consequently, high operating rates and a shortage of supplies in the domestic market in Germany have pushed up the prices. Prices of Anhydrous Ammonia CFR Hamburg were reported as USD 1625/MT in the week ending 8th April.

Nitrogen-based fertilizer prices, including Ammonia, are already high and are expected to rise further because of the Ukraine-Russia conflict. The Covid epidemic, general price inflation, and European’s plan to transition away from fossil fuels have pushed up the prices upwards. The crisis between Ukraine and Russia has exacerbated the prices and supply worries. Fertilizer firms in North America have been singled out as a source of rising nitrogen fertilizer prices. While the North American fertilizer firms are expected to have a strong year in 2022, several global market dynamics are driving up the fertilizer prices. In recent months, feedstock Nitrogen manufacturers' pricing has been scrutinized. The small number of enterprises active in nitrogen fertilizer suggests that they have the market power to affect prices and will continue to raise offers.

Other things that impact pricing include the scheduled maintenance of US manufacturing plants and the extent of plant shutdowns caused by Hurricane Ida, resulting in a decline in ammonia output in the US. During the summer, a North American nitrogen manufacturer launched an anti-dumping complaint against Russia and Trinidad and Tobago for an ammonium nitrate solution, which might restrict fertilizer supply and hike costs. Outside of the United States, the price of natural gas and Ammonia also contributed to the gap.

As per ChemAnalyst, "The European Ammonia market is likely to be bullish over the next two months, owing to limited spot supplies and rising Natural Gas prices. In Europe, high natural gas costs are anticipated to lead to some output reductions. The surge in ammonia prices is primarily due to the current Russia-Ukraine conflict, which is likely to continue pressuring the energy and natural gas prices, lowering production costs significantly."