Global blue ammonia prices extend losses in Feb

Platts global blue ammonia prices extended losses across the board in February, with losses most acute in Far East Asia, tracking conventional markets lower amid thin demand. Platts is part of S&P Global Commodity Insights.

Asia prices dropped 10% to $425/mt, while US Gulf Coast prices were down 4% to $528/mt. Prices in Northwest Europe remained the highest globally at $647/mt, down just 1% on the month, with natural gas costs providing a floor.

Platts blue ammonia price assessments are based on the conventional ammonia market price plus a premium reflecting the costs of carbon capture and storage.

The Platts Ammonia Price Chart(opens in a new tab) illustrates monthly averages of daily assessments for gray, blue, and "green ammonia" across a range of geographies and delivery options.

Blue ammonia is made from fossil fuel-derived hydrogen, capturing the associated CO2 emissions, while green ammonia uses hydrogen from renewables-powered water electrolysis. Assessments assume a levelized cost of renewable power input for green ammonia.

The green ammonia calculated costs of production assessments were broadly stable month over month. These are based on longer-term weighted average capital costs and levelized power costs.

Platts assessed delivered green ammonia costs in a range of $887-$1,052/mt, with the lowest cost for delivery to Far East Asia from Australia, and the highest delivered from West Coast Canada to the same destination.

Continued US uncertainty

Low-carbon hydrogen and ammonia projects in the US Gulf Coast are facing uncertainties due to potential US trade tariffs and the future of Inflation Reduction Act 45V Hydrogen production and 45Q Carbon Capture credits under the Trump administration.

The uncertainty is undermining the region's competitive advantage, previously supported by affordable natural gas, geology to support carbon capture and favorable policies.

Although tariffs may have a smaller impact on low-carbon ammonia projects if 45Q incentives persist, they could still affect the competitiveness of exports against Middle Eastern supplies, which already have a freight cost advantage to Europe and Asia.

"Concerns about US trade practices may lead countries to seek more stable partners," a low-carbon ammonia developer told Platts.

Asia-Pacific tenders

US Gulf Coast producers are eyeing participation in Japan's Contract for Difference program and the upcoming South Korean auction, with the former seen as more attractive, sources said.

US Gulf renewable ammonia developers expressed surprise at the high offers for carbon capture-enabled ammonia, priced at $600 FOB and $890/mt for CFD Japan.

Green ammonia prices in the region are nearing those of CCS-based ammonia, with FOB US Gulf prices for greenfield projects, including IRA 45V, expected to be around $700-$900/mt by 2028.

Market participants said CFR Gulf Coast CCS-based ammonia indications for long-term contracts ranging from $850-$890/mt were less competitive compared with notional values from the South Korean auction sourced from the Middle East.

Sources said the high prices could reflect the potential increase in freight rates anticipated for 2028-29 when these projects are expected to begin deliveries.

While offtake contracts are primarily negotiated based on price and tenure, Japanese buyers are also considering other factors, such as joint ownership opportunities in projects and the attractiveness of investing in the US.

Buyers in Japan are also opting for US volumes over cheaper Indian and Middle Eastern supplies.

Sources suggested that Japanese companies might prefer the US projects for geographical diversification and supply reliability, despite the higher delivery costs.

"Most of Japan's energy needs are fulfilled by the Middle East, and therefore the main objective is geographical diversification," a source said.

Low-carbon assessments

The cost to theoretically supply CCS-based low-carbon ammonia from the US Gulf Coast to Japan was heard in February at as high as $700-$750/mt CFR in February, for ammonia with a carbon intensity of 0.5-0.7 mt CO2/mt ammonia, well below the current Japanese well-to-gate threshold.

In line with these CFR indications, an indicative offer of $550-$600/mt FOB US Gulf was heard for ammonia with a similar carbon intensity.

The Japan Korea Ammonia Price (JKAP), a market-based CFR assessment of the low-carbon ammonia market in Japan and South Korea, was assessed in line with the conventional market in Far East Asia, also reflecting the higher cost of freight from major supply hubs to Japan. It began the month at $420/mt CFR, decreasing to a low of $365/mt CFR by the end of February.

The US Gulf Ammonia Price (UGAP), fell to $440/mt FOB by the end of February, down $10/mt through the month.

India cuts tender volume

Solar Energy Corp. of India, the government's tendering body, amended its renewable ammonia procurement tender on March 7, reducing the total capacity to 724,000 mt/year from 739,000 mt/year, and adding flexible trading terms while steering clear of asks relating to financial aspects of the auction.

SECI issued the tender for the production and supply of renewable ammonia for fertilizer firms through cost-based competitive bidding in June 2024 as part of the government's Strategic Interventions for Green Hydrogen Transition Scheme, but several bidders asked for clarity, delaying its finalization.

The large tender is being seen as a test case to gauge domestic companies' appetite for renewable fuels.