Rising blue ammonia production costs close in on green pathways

Stronger underlying conventional ammonia prices pushed calculated blue ammonia production costs higher through October, with costs rising to close to green production pathways.

Platts blue ammonia calculated production costs climbed by 20%-30%, tracking conventional markets higher.

Northwest Europe returned to the spot at the top of the most expensive blue ammonia region, with calculated CFR prices averaging $707/mt in October, compared with $691/mt for Far East Asia and $612mt in the US Gulf.

Platts is part of S&P Global Commodity Insights.

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Indicative offers for delivery to Singapore under long-term contracts of 10-20 years were heard around $300-$400/mt for blue ammonia from the Middle East or the US, and around $700-$800/mt for green ammonia from India or Australia.

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.

Calculated green ammonia production costs delivered to Northwest Europe ranged from $756/mt for east coast Canada origin, to $808/mt from the Middle East.

Platts renewable-power derived ammonia prices are more stable than their gas-derived counterparts as they reflect long-term levelized costs of electricity for both solar and wind generation.

These are relatively static variables month on month, while the "delivered into" component of these assessments reflect weekly shipping prices.

Conventional ammonia

Ongoing supply constraints supported conventional ammonia markets, though some of the heat was coming out, with plants returning, and muted European demand.

Ma'aden restarted its 1.089 million mt/year MPC ammonia plant in Saudi Arabia after a lengthy period of reduced output.

The impact of the restart in Saudi Arabia is yet to be felt, with Ma'aden not expected to reach normal levels of output at the plant until the end of November, but it holds the potential to ease the supply shortage behind recent price developments.

Low demand in Europe limited price rises there, despite a lack of product availability in November.

Clean ammonia offtake

Market participants said it was still difficult to sign long-term offtake agreements for low-carbon ammonia in the absence of common pricing ideas.

Japanese buyers were waiting for details of a contract for difference scheme, a Middle East source said.

A producer in India said there was a bifurcation in the market.

"We are dealing with two different types of markets here," the producer said. "One is Europe which is ready to pay a premium but not willing to commit for more than 10 years. Another is Asia which is ready to sign long-term contracts but not ready to pay a premium price."

A carbon price needed to develop to drive the market, the producer said.

A buyer in Asia Pacific said they had offers for both blue and green ammonia, but could not commit until regulations were clear.