TOAZ suspends ammonia transit following Yuzhny port closure

Russia's Togliattiazot, the world's largest ammonia exporter, has suspended transit of ammonia following the invasion of Ukraine, the company said Feb. 25.

TOAZ cited the "safety of people living in the area of the ammonia pipeline" in suspending transit operations. Ammonia production will continue in reduced levels to maintain urea production as well as fulfill contracted tons serviceable by rail, the company said.

TOAZ exports the bulk of ammonia to Morocco and Turkey through the Black Sea port of Yuzhny, which closed along with associated pipelines Feb. 24 following Russia's invasion of Ukraine.

"All over, there has been bombing in the area. Everyone is home, so no port activity," a Black Sea trader said.

Russia exported $2.14 billion in ammonia and fertilizers to Europe in 2020, according to UN Comtrade data, including $250 million in product to Turkey and $240 million to Morocco.

TOAZ produces 3 million mt of ammonia annually and 960,000 mt of urea annually, the company said on its website. Along with the suspension of pipeline transit, it also would shut down operations of four ammonia units and put three units into reduced capacity, the company said.

Yuzhny contributes an estimated 20% of seaborne ammonia west of the Suez Canal, so an impact on prices should "definitely be expected", the trader said.

Other trade sources said Moroccan phosphates producer OCP would lose access to 40% of its ammonia sourcing during the shutdown, potentially creating supply imbalances globally. OCP could not be reached for comment.

S&P Global Platts assessed the CFR Northwest Europe price at $1,150/mt Thursday, based on higher feedstock prices, and assessed the FOB Black Sea price at $1,125/mt, based on an estimated freight netback from Northwest Europe.

Values were heard for ammonia cargoes delivered duty-free into Northwest Europe from $1,150-$1,180/mt, and no trade information was heard for the Black Sea.