Platts to launch low carbon physical ammonia assessments for Japan, S Korea

Platts, part of S&P Global Commodity Insights, is to launch low carbon physical ammonia assessments for Japan and South Korea -- the Japan & Korea Ammonia Price, or JKAP -- with a target date of Sept. 1, 2023, Alan Hayes, head of energy transition pricing at S&P Global, said July 5.

"We will be launching our market-based price for low carbon ammonia delivered on a Japan, Korea basis. so this will be based on market indications, we will be speaking to traders, buyers and producers to get market evaluations for this new price," Hayes told S&P Global's Tokyo Commodity Market Insights Forum.

"Two key factors -- we will have a threshold for a carbon intensity, and any product that has a different carbon intensity we will use a carbon escalator to turn that value to our threshold," Hayes said. "We are very happy to announce that the market is at that stage where we can look to evolve market based pricing, equal rating the value of carbon intensity."

Platts targets to launch what will be the world's first low carbon physical ammonia assessments on Sept. 1, 2023, Hayes said, speaking on the sidelines of the Tokyo Commodity Market Insights Forum.

JKAP assessments will be for low carbon physical ammonia cargoes of 10,000 mt delivered into Japan and South Korea on a CFR basis for a 1-6 week forward period, Hayes said.

"Definitions around low carbon hydrogen and low carbon ammonia are becoming more clear," said Hayes, adding that the launch follows S&P Global's extensive market reach, where it finds that market participants are ready to give price indications.

"We are at early stage but there are market indications out there that allow us to make assessments based on market bids and offers so moving to the very early stage of what we recognize the tradable commodity market," he said.

Hayes added that the launch of JKAP will be "the next evolution of moving to the market based pricing" following the launch of the first hydrogen assessments in 2019 and subsequent launches of low carbon ammonia assessments for delivery into Europe, and Asia specifically in Japan.