Global blue ammonia prices extend gains in October

Platts delivered blue ammonia prices extended gains in October, with markets in the US Gulf and Asia rising by 5% and Northwest Europe edging up by 3%, tracking conventional ammonia markets higher.

Northwest Europe remained the most expensive region averaging $652/mt CFR in October, with prices in the US Gulf at $588/mt and Far East Asia the lowest priced region at $496/mt. Platts is part of S&P Global Commodity Insights.

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(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 on month. 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 $906-$1,054/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.

Market signals

The cost to supply carbon capture and storage-enabled ammonia from the Middle East and US Gulf Coast was reported by a trader in October at around $600/mt FOB, suggesting minimum delivered prices in Japan and South Korea of around $700-$750/mt CFR.

However, sources said no premium on conventional ammonia could be achieved yet in either country, with firm demand yet to emerge and government price support not yet in place.

Accordingly, the market for low-carbon ammonia in Japan and South Korea continued to be assessed in line with conventional ammonia pricing in the Far East Asian market, with only the higher cost of freight to Japan over other Far East Asian markets from key supply hubs.

A Japanese auction to support the supply of low-carbon hydrogen and derivatives is underway, to help close the price gap with conventional fuels. South Korea launched an auction earlier in 2024 for low-carbon hydrogen-fired power generation for up to 6,500 GWh/year over a 15-year period, from 2028.

The market-based low-carbon Japan Korea Ammonia Price (JKAP) was assessed in the range $465-$475/mt CFR through October, up from $440-$470/mt CFR in September.

Platts launched the US Gulf Ammonia Price (UGAP) on Nov. 1, a daily spot assessment of the FOB market for low-carbon ammonia along the US Gulf Coast, which is set to become a major supplier of low-carbon ammonia to Japan and South Korea in the coming years.

Meanwhile, the model-based Japan Ammonia Energy Substitution Index (AESI) decreased through October, narrowing the gap between the market-based JKAP and theoretical buyer willingness.

The Japan AESI, which indicates what a power generation company in Japan may be willing to pay for ammonia as an alternative to traditional feedstocks, edged steadily down through October from a high of $570/mt and closed the month at $491/mt, reflecting a decrease in Japanese power pricing.

Existing advantages

Project developers said uncertainty around timelines for planned hydrogen pipelines gave ammonia an advantage in the energy transition space.

"You have a huge advantage with ammonia, which is that you are building into an existing system," a renewable-derived ammonia developer with plans to operate production facilities globally told Commodity Insights. "The focus on ammonia now reflects more pragmatism, simply because it is uncertain how long it will take for various hydrogen pipeline networks to be established."

A market source said significant financial barriers for low-carbon hydrogen developments often led to project failures, as substantial upfront spending is necessary to secure offtake agreements.

Industry tends to favor larger companies with the financial capacity to absorb these costs, given the higher initial investments required even before reaching a final investment decision. Consequently, few investors are willing to finance such high-risk ventures, the source said.

Leading ammonia exporter Trinidad and Tobago is eyeing a major role in decarbonized ammonia trade, given its existing infrastructure.

Green ammonia production costs in the country could be more competitive than those of potential competitors, a regional source said, given its transformation, storage and export facilities.