Saudi fertz major Ma’aden’s $1.1bn new ammonia plant set to snub spot buyers

LONDON (ICIS)–Saudi Arabian Mining Company (Ma’aden) will allocate the entire output from a new $1.1bn ammonia plant to contract customers, rather than drop tonnes onto the spot market, a company source said on Thursday.

The fertilizer giant presently operates three 25,300 tonne capacity ammonia tankers, which load cargoes at Ras Al Khair (RAK) each month for long-term clients in India, China, Korea, Taiwan and Jordan.

That fleet will grow to seven early next year as the firm debuts its new 1.1m tonne/year unit, with the inaugural voyage of the latest addition to its marine transportation due to set sail for Korea this weekend.

The 25,300-tonne capacity carrier Searambler will load a full cargo of the nitrogen fertilizer before setting sail for Ulsan, where she is scheduled to discharge for Lotte Fine Chemical (LFC) on 6 December.

Earlier this week, Ma’aden sold a 25,000 tonne spot cargo of ammonia to Canadian major Nutrien at $800/tonne FOB (free on board) for December loading at RAK.

Extreme tightness in the global supply/demand balance due to deep capacity cuts in Europe – where natgas prices have spiked in recent weeks – left Nutrien with no choice but to source the US-bound material from east of Suez.

In doing so, it followed a pattern set by two other major market players, Yara and Trammo, who have sourced Saudi material from the Kingdom for discharge in Europe.

But the trend may soon stop as the Ma’aden source said the manufacturer is now sold out of spot material through March, even though the new plant will generate around 100,000 tonnes/month for export – assuming a one-month turnaround for annual maintenance.

“The new plant will hit the market in Q1 2022 [and its output will be] 100% contract volume,” the source disclosed.

“Existing customers are requesting additional volume and we are in [the] process of onboarding new customers.”

No further details about where in the world the extra output will end up has yet been disclosed, but market talk is that some volume could head to Morocco and China.

By 2025, the new ammonia plant will provide feedstock to a huge $4.2bn phosphates plant currently under construction, adding 3m tonnes/year of capacity to Ma’aden’s existing crop nutrient portfolio.

In addition to ammonia, the company manufactures and exports large volumes of monoammonium phosphate (MAP), diammonium phosphate (DAP) and nitrogen, phosphorous and potassium (NPK).