Against the backdrop of soaring natural gas prices and the squeeze this is putting on both the energy sector and various industries in Europe, further fertiliser plant closures have now been confirmed.
Yesterday (Thursday) it was announced that CF Industries had closed its two plants in the UK in Ince and Billingham, due to the current pricing dynamics. No estimated timeline was given for operations to resume.
Yara International has today announced that it is curtailing ammonia production at a number of its European sites, citing the record high gas prices and the impact on margins.
Including optimisation of ongoing maintenance, Yara will by next week have curtailed around 40% of its European ammonia production capacity, it said.
Local news reports in the last 24 hours also confirm gasworld’s prior understanding that Fertiberia, the Spanish fertiliser heavyweight, will be curtailing operations at some of its production sites. Fertiberia management has reportedly decided to stop production at its Palos de la Frontera site from 1st October. Its Puertollano factory remains in a scheduled shutdown for ongoing investments.
More to come
Further still, gasworld has now learned that more plant closures are to be expected as the knock-on effects of record high gas prices continue to play out.
Jennifer Willis‑Jones, Senior Markets Editor for Nitrogen and Fertilisers at CRU Group, explained, “The closure of fertiliser capacity in Europe due to soaring gas prices will curb supply of nitrogen fertilisers, which will have a knock-on effect on supply of C02 in Europe.”
“In fact, looking at current gas prices and futures gas prices, nitrogen fertiliser plants in Western and Eastern Europe, as well as Ukraine, are currently in negative margins producing ammonia. As such, further plants closures are expected in these regions.”
“Lithuania’s Achema last month cancelled plans to restart its ammonia facility at the end of August. High production costs have led to a partial closure of ammonia production at OCI’s Geleen plant in the Netherlands. Fertiberia said it has cut ammonia output in Spain. CF Industries said late 15th September it was halting operations at its Billingham and Ince nitrogen facilities in the UK, citing high gas prices,” she continued.
“Yara said early 17th September that it was curtailing its European ammonia production capacity by 40%, due in part to record high natural gas prices cutting into production margins. Production curtailments are expected to be announced in Ukraine soon.”
Attempting to look further ahead, Willis-Jones noted the strong demand expected ahead for ammonia, urea and nitrates through to Q1 2022.
‘This piles more pressure on the nitrogen fertiliser industry, with demand expected to be relatively strong in Europe for ammonia, urea and nitrates over Q4 2021 and Q1 2022,” she said. “This will have to be served by imports, but this will not help CO2 buyers in Europe.”
gasworld has also contacted both Yara International and Fertiberia for further information.