Ammonia
Overview
The ammonia market is undergoing a period of rapid and dramatic change. Conventional or ‘grey’ ammonia is traditionally produced almost exclusively for its nitrogen content. However, the urgent need to decarbonise the global economy and meet ambitious zero-carbon goals has opened up exciting new opportunities.
Ammonia has the potential to be the most cost-effective and practical ‘zero-carbon’ energy carrier in the form of hydrogen to the energy and fuels sectors. This has led to rapid growth of interest in clean ammonia and a flurry of new ‘green’ and ‘blue’ ammonia projects.
Argus has many decades of experience covering the ammonia market. We incorporate our multi-commodity market expertise in energy, marine fuels, the transition to net zero and hydrogen to provide existing market participants and new entrants with the full market narrative.
Our industry-leading price assessments, powerful data, vital analysis and robust outlooks will support you through:
- Ammonia price assessments (daily and weekly), some of which are basis for Argus ammonia futures contracts, Ammonia forward curve data and clean ammonia cost assessments and modelled weekly prices
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Latest ammonia news
Browse the latest market moving news on the global ammonia industry.
Q&A: Germany's PtX Fund to ramp up in round 2
Q&A: Germany's PtX Fund to ramp up in round 2
London, 9 January (Argus) — Germany's state-backed Power-to-X (PtX) Development Fund aims to help unlock investment decisions for a handful of mature renewable hydrogen and derivatives (power-to-X) projects in select countries, thereby advancing environmental and social development goals. Berlin picked Bavaria-based fund manager KGAL to control the €270mn ($279mn) purse, and it recently awarded its first €30mn to a €500mn Egyptian project that will produce 70,000 t/yr renewable ammonia. Argus spoke with the fund's managing director Thomas Engelmann about lessons learned from the first round and hopes for round two, which opens 8 January – 5 March 2025. Edited highlights follow: Which countries are eligible in round 2, how is that decided? It is the mostly the same as round one — South Africa, Brazil, Morocco, Kenya, India, Egypt — plus Colombia as a new addition. The German government selects the countries most suited for this instrument from more than 60 partner countries co-operating with the Federal Ministry for Economic Cooperation and Development (BMZ). Not all countries have the right ecological conditions. Participating countries ideally have a workforce that is prepared to support PtX, and some potential domestic offtakers in the country. Why was Colombia added for this round? Colombia has good conditions for renewables — its electricity mix is currently 65pc hydroelectric, 4pc solar, and 30pc fossil fuels. And it plans to add 3GW offshore wind in future via government-run auctions. So Colombia should have among the cheapest PtX production. Costs in northern Colombia may reach €3.3/kg ($3.4/kg) in 2030 and €2.7/kg ($2.8/kg) by 2040, according to German research institute Fraunhofer ISE. The strong government support from Colombia also helps our goal of social transformation. What size projects will the fund support? We haven't set a minimum size, but ideally the total capital costs should be in the range of €100mn–500mn. That means €5bn 'white elephant' projects are probably not for us. We have up to €30mn available, which is definitely not enough to change the investment decision for a €5bn project. What is the €30mn grant designed to do? We bridge the gap to financial close, so our €30mn grant agreement supports the banks, supports the sponsors, acting like an airbag for the project to mitigate any kind of risks or uncertainties in the project. For us, it's non-refundable — in return we expect to see ecological and social transformation that comes from financial close and commercial operation. What key ingredients do you look for in projects? We are bound by EU state aid law, so we check very early in the process if projects are eligible. Project feasibility and technical readiness are important. We check the source of the renewable power. We check it's a profitable and reasonable business model. Clearly, we are not seeking return on investment for the PtX Development Fund, but we need to check that the equity sponsors and debt partners see a project that is economically viable. We want projects that have secured land and will reach financial close in 6-12, maybe 15 months. If a project is further away, that doesn't mean it's a bad project, it's just not ready for the purposes of this instrument. Each project must do a very intensive environmental and social impact assessment based on the lending standards of the World Bank via its International Finance Corporation (IFC). That is the minimum for eligibility before we consider its level of positive impact. Regarding impact, we want greenhouse gas emission reduction or avoidance. We want replacement of fossil fuel resources, in particular coal. We want job creation in the country and a 'just transition'. It's interesting if a project is scalable, for example, if we help with a €200mn first phase that unlocks future phases for the partners even without us. Are those criteria typical for many financiers? Correct, so it's a huge plus for a project if our fund awards a grant, as it shows the overall concept of the project has been checked according to World Bank and IFC standards. Other banks coming later or in parallel to us know the project is sustainable, complies with renewable power additionality principles, does not conflict with local water uses, and its land is free from social or ecological conflicts. Does the fund have rules on who the offtaker should be? Ideally the project would have offtakers in the country to support our target of local value creation. But not all seven countries have the possibility to absorb 100pc of the product, and clearly, we need economically viable projects. In our first-round project, part of the ammonia stays in Egypt and part will go to Europe. What lessons can developers take from round one? We realised the name PtX Development Fund could be misinterpreted, as we often had to explain that we don't have development money available — our name just means we are supporting developing countries. Hopefully in round two, those projects will return with an extra year of maturity. Second, we must clarify that the environmental and social impact assessment is of utmost importance. We very often had discussions with developers that said, "my local government is not interested in doing impact assessments on ecological or social impacts," but we, as the PtX Development Fund, cannot accept that. On technology, the starting point must be electrolysis since this instrument aims to help bring it to market and lower its cost. Yes, e-fuels production needs some carbon molecules, but we don't want projects that are completely biomass with no electrolysis involved. And what did you learn about the wider PtX industry? We were positively surprised to get 98 expressions of interest totalling €150bn potential investment and 56GW electrolyser capacity across these countries. But most projects were still in feasibility studies. We followed up with around 10pc of interested parties, then after deeper due diligence, held negotiations with 2-3 projects. We see the technology for PtX is ready, but finding offtakers able to pay the premium for CO2-neutral products is hard. Mandates with penalties, like the EU's e-SAF quota, definitely stimulate the market, but it would be better if they started in 2025-26 rather than 2030. Green ammonia buying for now is mainly voluntary and it depends on fertilizer companies being able to attract a premium for it to work. A green steel market is emerging in Sweden, as carmakers can attract a premium for 'green' products. We hope the EU's Renewable Energy Directive III will set quotas for ammonia and steel, but the carbon border adjustment mechanism is of utmost necessity to ensure European industry is not disadvantaged. What are your expectations for round two? Round one gave us an overview of the countries, so we really know about the quality of the projects. Now in round two, we want to support possibly several projects. Projects may enter multiple rounds and increase their quality each time until they reach an attractive level. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.
Viewpoint: US amsul demand to stretch supply in 1Q
Viewpoint: US amsul demand to stretch supply in 1Q
Houston, 26 December (Argus) — US ammonium sulfate (amsul) prices are likely to remain elevated through the first quarter of 2025 because of increased demand, high feedstock costs and more forward purchases as buyers look to avoid the high prices seen last spring. Scarcity seen in the 2023-2024 fertilizer year in the US amsul market has continued into 2024-2025. Strong demand has drained US inventories, despite rising domestic production in the third quarter, which increased by 11pc to 4.8mn short tons (st) compared to the five-year average of 4.25mn st, according to data from The Fertilizer Institute (TFI). But production in the fourth quarter has fallen because of extended plant downtime. Major production facilities such as AdvanSix's 1.75mn st Hopewell, Virginia, plant and Nutrien's 700,000 metric tonne (t) Redwater, Alberta, plant underwent prolonged turnarounds in the fourth quarter, according to sources. The unplanned downtime reduced the availability of pre-pay volumes in the market and caused at least one producer to partly cover their reduced output by purchasing imports. But imports have only provided the US market with limited supply relief. Year-over-year, US imports are lagging by 17pc from July through October. Around 282,700t of amsul entered the US during the period, compared to the 338,600t that arrived in the same period last year. This year's imports are still 11pc greater than the five-year average, illustrating the trend of demand growth in the US. Increasing feedstock costs have also supported amsul prices through the back-half of 2024. Fertilizer producer IOC said higher feedstock costs were the primary driver of its fourth quarter price hike at the start of October. Feedstock ammonia prices are expected to slip or remain stable for January because of seasonal weakness and lower global prices, said sources. Feedstock sulfur market prices on the other hand have risen over the period and may incur a $20-30/st increase because of rising global demand, according to market participants. Amsul's relationship status update Amsul values slipped in December and early January of last year, allowing the market to buy at lower values before the spring season. The opposite is anticipated to occur this year after major producers AdvanSix and IOC increased their offers for first quarter pre-pay delivery in December. Despite the rising price of amsul, buyers have been lining up more forward deliveries this fall than other years, according to sources. In lieu of hand-to-mouth buying and rising prices last spring, buyers are looking to hedge against potential volatility in the back half of the fertilizer year. Bolstered demand has led to additional price strength which is expected to persist through the winter season. Demand for ammonium sulfate arrived earlier than usual but it is unclear whether it will resurface as strong in the spring. Amsul price in the US Corn Belt recently rose to an average of $380/st, 20pc above the average price in December of last year. Amsul prices typically rise in the spring season when applications begin, so amsul values would appreciate even further if that trend occurs this year. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
CBAM to drive low-carbon NH3 market: Woodside Q&A
CBAM to drive low-carbon NH3 market: Woodside Q&A
London, 16 December (Argus) — Ahead of the Argus Clean Ammonia Conference Europe in Rotterdam this month, Argus spoke to Rick Beuttel, vice president for new energy at Australia's Woodside Energy, about its recently acquired carbon capture and storage (CCS) ammonia production project in the US Gulf. Edited highlights follow. Tell me about Woodside Energy and how you ended up buying OCI's 1.1mn t CCS ammonia project in Beaumont, Texas? Woodside is a global energy company founded in Australia, providing reliable and affordable energy across the world. Our global portfolio includes LNG, oil and gas assets across Australia, the Gulf of Mexico, the Caribbean, Senegal, Timor-Leste and Canada. Our capital allocation framework also includes target investment criteria for new energy opportunities as we work towards creating a diversified and flexible portfolio that can respond to changes in demand and supply for our products. With respect to the Beaumont Clean Ammonia project, our acquisition positions Woodside to be an early mover in the lower carbon ammonia industry and meet growing customer demand globally. It supports our strategy to thrive through the energy transition with a low-cost, lower carbon, profitable, resilient and diversified portfolio. How is the Beaumont plant progressing? Is it still on track to start producing in 2025, with CCS operational from 2026? Woodside continues to target first ammonia production from 2025 for phase 1. Lower carbon ammonia production is targeted for 2026, following commencement of CCS operations to be provided to Linde by ExxonMobil. How is the regulatory market shaping up in Europe and what affect does this have on you as a producer? We believe that Europe's carbon border adjustment mechanism (CBAM) is going to be the driving force that pushes consumers of ammonia or hydrogen to adopt lower carbon molecules from 2026 onwards as a way to remain compliant and reduce costs. But Europe is not the only end market. There are tenders for lower carbon ammonia in Asia, and the OCI team and now Woodside have been active in pursuing those opportunities. In Asia, buyers prefer long-term contracts. European opportunities follow more closely the traditional ammonia market, whether for fertilizer or as a chemical feedstock, and are shorter term contract durations. Beaumont gives us the opportunity to have a balanced portfolio, both geographically and from a contract perspective. How achievable are premiums for low-carbon ammonia in the current market and do you expect CBAM implementation will aid this? For Woodside, phase 1 of the project exceeds our capital allocation targets. And we'd love a huge premium on day one. But you have to be pragmatic. While there is a great deal of climate sensitivity, people are running businesses and cost is a concern. In our view the return on investment is there and the premium will increase as the CBAM percentage increases. You also have to consider the underlying cycle of the ammonia market, global events, Europe's position with respect to gas supply and the efficiency or competitiveness of existing ammonia assets. All of these will likely cast as long a shadow as CBAM, particularly in the early years. The Woodside project adds 1.1mn t to the market in 2026. Do you see enough demand from new cases to consume the additional supply? There is also another project in Texas City, which will come on line soon. Of course, these two new assets coming on stream will have an impact. But if we look at the underlying competitiveness of the Gulf Coast, with low-cost gas and these new, large scale, very efficient assets, we believe they will compete. But we are not going to be running the facility at full rates from day one and we are more looking forward to trading the lower carbon ammonia. Some of that will go to Europe and some to Asia. Speaking of which, have you participated in either the Japanese or Korean tenders? We are looking at all markets where there is lower carbon ammonia activity, whether that is power generation, bunkering or other markets. Looking at power generation markets in Asia, Woodside has long-standing relationships with many of the countries from an LNG perspective. Making lower carbon ammonia from natural gas and shipping it around the world is very much analogous to shipping LNG. By Lizzy Lancaster Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Ice AOA ammonia contract volumes pass 26,500t
Ice AOA ammonia contract volumes pass 26,500t
London, 11 December (Argus) — The Ice Ammonia Outright — Argus Ammonia (AOA) northwest Europe cfr future contract has surpassed 25,000t traded, reaching 26,500t on 9 December. The Ice AOA futures contract was launched on 16 January 2023 and settles against a calendar-month average of the daily Argus northwest Europe cfr duty free price. The contract's block trade minimum threshold is five lots. One lot is the equivalent of 100t. Since the contract launched, all trades have gone through FIS brokers and cleared through Ice. "Ammonia's role in the energy transition highlights its potential as a cornerstone of low-carbon energy solutions, and we are optimistic about the bright future for this product," FIS ammonia and fertilizer broker Kieran Walsh said. Ammonia is gaining traction as a potential method of decarbonising energy sectors, by producing it using renewable energy sources or through carbon capture and storage techniques. It can potentially be used directly as a fuel source in the marine sector, for co-firing in power generation or as a hydrogen carrier. More than 3mn t of physical ammonia has been imported into northwest Europe so far in 2024, according to Argus line-up data . Europe as a whole accounts for about a fifth of global ammonia imports, or about 4mn-5mn t/yr. By Ruth Sharpe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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Insight papers - 28/11/24Integrating clean ammonia: Chain of custody approaches
Unique analysis of the ammonia industry’s efforts to decarbonise, focusing on the search for the most efficient and cost-effective way to integrate low-carbon molecules into an existing ammonia supply chain.
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