Blue, green ammonia prices diverge as electrolysis power prices rise, natural gas falls

Blue and green ammonia price indications diverged in February as capital costs for electrolysis and rising power prices pushed up renewables-derived production cost calculations, while falling natural gas prices continued to weigh on prices for blue production pathways.

Blue ammonia prices slipped by $50-$60/mt, with Far East Asia prices falling to $369.63/mt, their lowest level since May 2023.

US Gulf Coast prices fell to $469.25/mt, while Northwest Europe remained the most expensive region at $508.57/mt. Blue ammonia is made from fossil fuel-derived hydrogen, capturing the associated CO2 emissions.

Costs for green ammonia (produced from hydrogen from renewables-powered electrolysis) rose, with higher levelized electricity costs in Canada, and capital costs for developers increasing.

Renewable-derived ammonia delivered to Far East Asia from the west coast of Canada became the most expensive, averaging around $888/mt in February.

The Platts Ammonia Price Chart illustrates monthly averages of daily assessments for gray, blue and green ammonia across a range of geographies and delivery options.

Increasing price transparency

The low-carbon ammonia market is seeing increasing activity from developers looking to capture buyer demand.

However, securing offtake agreements remains a challenge for many projects, with uncertain long-term pricing forecasts.

"I feel this might be the year we see increases in green ammonia [and] hydrogen price forecasts and offers due to lack of cheap green power prices," an ammonia producer told S&P Global Commodity Insights.

Market participants are increasingly willing to share indicative buy and sell indications, bringing a growing transparency to the nascent sector.

US Gulf market development

A trader gave an indicative green ammonia value at $600-$800/mt for a long-term contract for a 500,000 mt/year facility in the US Gulf Coast.

A producer indicated levelized costs of production for US Gulf green ammonia around $790/mt, without subsidies and assuming a levelized cost of electricity of $41/MWh for a 400-MW facility.

However, the producer added that a power purchase agreement including grid connection and transmission expenses would be around $60-$70/MWh for green ammonia plants, while a developer said $90/MWh was more reflective of PPA prices for renewable hydrogen projects.

PPA prices in California were closer to $180/MWh for green hydrogen plants, including grid connection and transmission fees, a developer said.

The producer said if a developer wanted to use only EU Renewable Fuel of Non-Biological Origin renewable power, this would imply further costs as the power source must also be subsidy-free.

Sources said Europe is seen as a premium market, linked to fundamentals in the conventional ammonia market.

The conventional ammonia market in Europe appeared to have found a floor, with the rollover of the Tampa contract agreed between Yara and Mosaic at CFR for March deliveries feeding through.

A low-carbon ammonia developer gave an indicative offer at $1,000/mt FOB US Gulf Coast under a long-term contract.

A blue ammonia developer said they were offering ammonia with a carbon capture rate of 95% at $320-$330/mt FOB USGC, based on Henry Hub natural gas price of $1.655/MMBtu, for 15,000 mt/year from the fourth quarter of 2025.

Saudi Neom on track

In project developments, Saudi Arabian megaproject Neom is on track for first green hydrogen production by the fourth quarter, with a view to starting commercial production in 2026.

The first production of 8 mt/day of hydrogen is on track from the Hydrogen Innovation and Development Center with full production of 600 mt/day for 1.2 million mt/year of ammonia to start in 2026, CEO Wesam Y. Alghamd said.

"One of our competitive advantages is the scale, which definitely will help to make a competitive price," Alghamdi said.

In Europe, Fertiberia, Lantmannen and Nordion Energi plan to develop a green fertilizer production project, Power2Earth, in Sweden to produce up to 450,000 mt/year of ammonia from 640 MW of electrolysis from the end of 2028.

The group is targeting a final investment decision in the fourth quarter of 2025 with Spanish fertilizer group Fertiberia and Swedish agriculture cooperative Lantmannen anchor offtakers.

Fertiberia also signed an agreement with Spain's Cepsa to develop 1 GW of green hydrogen capacity in Huelva, Spain. The deal confirms the commitment of both the companies to the second stage of a project announced in February 2023 to install 200 MW of green hydrogen capacity at the site by 2026.

Elsewhere in Europe, Yara provided an update on its plans for green ammonia production at a pilot site at Porsgrunn, Norway.

Limited production had commenced as part of the commissioning process, with long-term plans to produce up to 20,000 mt from a 24-MW proton exchange membrane electrolyzer, CFO Thor Giaever said.

And results from Germany's first H2Global import tender for green ammonia are expected in the coming weeks.

Hintco -- the company managing the auctions – was in negotiations with up to five companies in February to finalize bids after the bidding window closed in January, CEO Timo Bollerhey said.