IFA ’22: Global ammonia market unsettled and uncertain

VIENNA (ICIS)–The sharp drop in the Tampa June ammonia contract price, down by $425/tonne, has left the international ammonia market – and related downstream markets – unsettled and uncertain about the weeks and months ahead.

Speaking on the sidelines of the International Fertilizer Association (IFA) annual conference in Vienna, most market participants were rather perplexed as to why ammonia prices have started to move down globally when, fundamentally, there is a shortage of ammonia.

The shortage of tonnes from Russia out of the Baltic and Black Sea was a key topic of discussion, as was what should now be deemed the global benchmark price for ammonia.

Typically, this price has been Yuzhny FOB (free on board), also known as the Black Sea FOB ammonia price. Yuzhny is located in Odessa, Ukraine.

Since the Russia-Ukraine conflict began, this price has been non-existent, as has ammonia exports out of the Black Sea.

WHAT NOW
The question now is what should – and could – the industry use as the global benchmark for ammonia trade.

Particularly, now that most industry participants believe the situation in the Black Sea could last at least 12 months.

“There are so many variables in the market it is so difficult to predict what might happen from one day to the next,” said an ammonia trader.

Another ammonia seller said the lack of trade flows and spot activity was making it very challenging to price ammonia.

“The only business we see is [from producer] OCP. They bought last week. We heard at $950/tonne CFR [cost and freight], others were saying $990/tonne CFR,” the seller said.

The OCP purchase, whether it be at $950/tonne CFR or $900/tonne CFR, is the lowest ICIS ammonia price into Morocco since December 2021.

Meanwhile, in the downstream urea market, sources in this sector of fertilizers are also just as confused about the direction in the urea market.

There is little demand from any of the major importing hubs across the world and there is no shortage of tonnes offered from major exporting hubs, including Russia.

Russian urea continues to be exported to North and South America, as well as other parts of the world.

The IFA annual conference runs in Vienna on 30 May-1 June.

Front page picture: An Ukrainian soldier in Odessa’s coast in March; Odessa hosts a key global fertilizers export hub
Source: Louai Barakat/IMAGESLIVE via ZUMA Press Wire/Shutterstock