A new carbon dioxide (CO2) supply crisis could be set to emerge in the days and weeks ahead, with the fertiliser industry under strain from soaring natural gas prices and the subsequent effect of plant closures on ammonia production.
CF Industries reportedly closed both its fertiliser plants in the UK today (Thursday).
Closure of the plants, located in Ince, Cheshire and Billingham, Stockton-on-Tees, comes as a result of high natural gas prices, the main feedstock for ammonia production. No estimate has yet been given for when production may resume.
gasworld understands a similar scenario may be unfolding in Spain, and has reached out to leading Spanish fertiliser producer Fertiberia for clarification.
CO2 is itself a by-product of ammonia production.
Ammonia remains the largest feedstock for food-grade CO2 production in Europe, a supply chain that came under intense scrutiny in the summer of 2018 when significant CO2 shortages were endured across Europe and sent shockwaves through the food and beverage and hospitality sectors.
‘Imports will be essential’
Christopher Carson, Founder and Principal Director at Carbonic Solutions, affirmed ‘a big CO2 crisis could be looming’ if both CF Industries plants remained down and the current dynamics in high natural gas pricing and soft ammonia pricing continued.
He told gasworld, “This could be very significant for the UK, as it would take out two very large pieces of capacity, leaving only one large-scale CO2 production plant in operations.”
“If this happens, most of the suppliers in the market will be significantly impacted, and imports from the continent will be essential to meet domestic demand.”
The UK had only just been easing out of a tightening in CO2 supply during the summer months.
Reports emerged in July of a lack of CO2 threatening UK meat production, specifically within the poultry sector, thought to be as a result of extended downtime at the Billingham CO2 facility. Scheduled maintenance planned for early June was unexpectedly extended through to August combined, gasworld understood, with depleted storage required for the periodic inspection of storage tanks on the site.
This led to strain on the domestic CO2 supply chain and a gradual return to normal levels throughout August.
Speaking previously, Carson confirmed there had been a shortage in supply during an exclusive gasworld webinar on 30th July, and said that Carbonic Solutions had been receiving multiple calls every day from companies attempting to acquire any excess CO2.
“It has been extremely busy for about the last month. My phone’s ringing off the wall even as we sit here,” he explained. “In the UK, one of the largest sources, Billingham, has gone down and it’s been down for over a month now and that’s creating shortages in the market.”
Despite being a self-admitted ’very small player’ with just a couple percent market share, Carson said that Carbonic Solutions’ supply chain was doing well, and the company was trying its best to help those struggling with supply.
“We have our struggles just like everybody else, but we’ve been able to really try to help the customers in our region that we can and help them keep their plants running.”
Speaking about the relatively unstable nature of the UK’s CO2 market, Carson had also said that the UK remains a volatile market with an equally volatile supply and demand balance.
It now appears to be at the mercy of a new perfect storm in external headwinds, as the rising natural gas prices take their toll on the energy sector and industry alike.