ICE exchange to launch Platts-based ammonia derivatives contract

ICE Futures Europe is to launch a new ammonia futures contract based on Platts weekly CFR Northwest Europe assessment, with a first trade date scheduled for Monday, Dec. 11, the exchange said Oct. 31.

Platts, part of S&P Global Commodity Insights, last assessed the price at $640-$680/mt Oct. 26, up 6.67% week on week.

"Ammonia is still primarily a fertilizer market, and is heavily physically benchmarked using PRA [price reporting agency] assessments," said S&P Global Commodity Insights' Global Pricing Director, Fertilizer, Robert Beaman.

Efforts to establish an ammonia derivatives contract have previously failed to attract much interest, Beaman said, noting the conventional ammonia market "is particularly interested in those assessments which are used in physical contracts."

If successful, Beaman said the conventional ammonia derivative could attract the attention of an emerging clean ammonia market.

"Solutions put in place for traditional markets like ammonia and methanol can get carried through to become part of the structure of energy transition markets, which are evolving very rapidly," he said.

Platts assesses a range of gray, blue and green ammonia prices, with recent trends showing a firming in the conventional market feeding through to blue ammonia prices.

Global ammonia production amounts to around 191 million mt/year, of which 10% is traded on the world market.

Global capacity expanded faster than demand between 2011-2015 and has now reached 230 million mt/year, with utilization rates below 80%.