US, Northwest Europe extend blue ammonia premium to Asia in September

Platts-delivered blue ammonia prices in the US and Northwest Europe extended their premium to Asia in September, tracking gains in conventional ammonia markets amid supply constraints in the Middle East and North Africa.

Platts, part of S&P Global Commodity Insights, assessed blue ammonia CFR US Gulf at an average of $561/mt in September, up 9% on the month, with Northwest Europe delivered prices rising 4% to $632/mt.

Far East Asia prices, meanwhile, remained relatively soft, climbing just 2% to $475/mt.

Platts blue ammonia prices 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 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 September green ammonia calculated costs of production assessments were broadly stable month on month, Commodity Insights data showed. These are based on longer-term weighted average costs of capital and levelized power costs.

Platts assessed delivered green ammonia costs in a range of $910-$1,055/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, Commodity Insights data showed.

Mexican potential

In low-carbon ammonia and hydrogen market developments, sources said Mexico’s renewable-derived hydrogen production could compete in major demand centers, although a national roadmap and production incentives are crucial to reduce costs and develop the sector.

A market source said electrolyzer supply constraints were delaying a renewable hydrogen plant in Mexico.

However, market participants noted optimism over a renewed national approach to environmental commitments and an energy transition strategy under the country’s new administration.

Mexicali in the north of the country could have the greatest potential for cost-competitive renewable hydrogen and ammonia because of its high solar photovoltaic potential, a recent study from the German Agency for International Cooperation (GIZ) in Mexico found.

The location could deliver costs below $1,000/mt by 2025, falling to below $700/mt by 2030.

Japan, South Korea auctions

In Asia Pacific, market sources are awaiting the results of low-carbon ammonia tenders in Japan and South Korea, with the Korean tender results expected in December and the Japanese tender award to come in 2025.

While ammonia continues to emerge as the leading hydrogen carrier for long-distance transport, sources said methanol, liquid organic hydrogen carriers and liquefied hydrogen were also viable alternatives.

Buyer preferences depend on transport efficiency and end use, such as blending with coal or natural gas, with the latter application favoring liquid hydrogen.

Project headwinds

Recent renewable ammonia and eMethanol project cancellations underline the uncertain outlook for the sector.

In late October, ammonia and fertilizer company Yara International shelved plans for the full-scale development of renewable hydrogen projects at its sites in Porsgrunn, Norway, and Sluiskil, the Netherlands, as part of a wider review of its assets portfolio.

Moreover, Danish wind developer Orsted will exit two green hydrogen projects in its home market as part of a strategy to "de-prioritize" clean fuels activities in Northern Europe, the company said earlier in the month.

Orsted is withdrawing from the Green Fuels for Denmark initiative, which in 2022 received DKK600 million in support from the government under the EU's Important Projects of Common European Interest program.