Blue ammonia prices up 50% on month
Tight supply boosts gray ammonia prices
Market seeks EU clarity on green ammonia storage
Blue ammonia prices firmed in September, tracking gains in the conventional market, while a lack of offtake agreements from would-be green ammonia buyers is hindering final investment decisions from project developers.
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Register Now The conventional ammonia market firmed through September as competition for prompt volumes intensified, driving up blue ammonia prices.
Blue ammonia prices rallied by around 30%-50% on the month. Far East Asia became the most expensive region for delivered blue ammonia, Platts pricing data shows, averaging $546/mt in September and nudging above prices in Northwest Europe at $542/mt.
Platts is part of S&P Global Commodity Insights.
The Platts Ammonia Price Chart illustrates monthly averages of daily assessments for gray, blue and green amonia across a range of geographies and delivery options.
In conventional ammonia markets, a delayed restart to Ma’aden’s 1.089 million mt/year MPC ammonia plant in Saudi Arabia pushed east of Suez prices higher.
Western markets also felt the stress of supply constraints, the build of pressure culminating in a $185/mt month-on-month price rise at Tampa for October deliveries, with Yara and Mosaic agreeing a monthly contract price at Tampa of $575/mt CFR.
There was also a steady rise in delivered prices in Northwest Europe, despite slow demand, and the market tracked others higher.
Blue ammonia premiums
In the US, ConocoPhillips, JERA Americas and Uniper signed a heads of agreement for a low-carbon hydrogen and ammonia sales contract on the Gulf Coast.
Under the non-binding agreement, Uniper will be a core customer for the low-carbon ammonia from the planned 2 million mt/year plant.
A US producer looking to export blue ammonia to Japan said buyers were unwilling to pay a premium t gray ammonia, instead wanting to invest in the project itself.
The producer is making significant investments in carbon capture and sequestration, requiring a price premium to cover the cost.
Platts assessed the premium for blue ammonia over conventional production at the US Gulf Coast around $24/mt in September.
In Asia Pacific, Platts launched a new daily market-based low-carbon ammonia assessment, the Japan Korea Ammonia Price (JKAP), effective Sept. 4.
The assessment, CFR basis Japan and South Korea, represents the market price of ammonia with a maximum carbon intensity of 40g CO2eq/MJ.
“This assessment will bring transparency to the growing market of low-carbon ammonia, driven by non-traditional sectors, notably power generation,” S&P Global Commodity Insights said.
The assessment is for cargoes of 15,000-25,000 mt of anhydrous ammonia, which is around 82% nitrogen and stored and transported as a liquid under pressure at around minus 33 degrees Celsius, for loading one to sx weeks forward.
Green ammonia storage concerns
In India, renewable hydrogen developer Avaada Group said in September it would establish a renewable hydrogen and ammonia manufacturing unit in Odisha state following the signing of a memorandum of understanding with Tata Steel Special Economic Zone.
The renewable hydrogen/ammonia unit will be set up at the Gopalpur Industrial Park in Odisha, being developed by Tata Steel Special Economic Zone.
An Indian producer looking to export to the EU said green ammonia storage at European ports remained a major challenge due to a “lack of clarity on plans to set up storage,” further elevating green ammonia prices.
A lack of commitment from buyers for long-term offtake agreements is another factor hindering FIDs for green ammonia projects.
Some buyers looking to secure low-carbon hydrogen from the USGC that favor longer-term investments will pursue partnerships where the investment and project risk is shared, with one handling the future prodct.
However, would-be buyers in Europe are holding off from committing to long-term agreements in the expectation that costs will come down as technology improves.
An end-user said policy clarity was also needed on ammonia cracking, with some buyers looking to import ammonia to crack back to hydrogen.
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.
Platts blue ammonia assessments have gone from a premium to renewable-derived green ammonia prices earlier in 2023 to a considerable discount, with green ammonia assessments averaging between $755/mt and $805/mt in September, slightly firmer month on month.
