Northwest Europe ammonia-to-hydrogen production costs dip further in early February

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen assessment posted mild losses at the beginning of February, with the premium held over natural gas-based hydrogen production methods narrowing for a second straight week.

The ammonia-to-hydrogen northwest Europe assessment came in at €7.13/kg on 3 February, a small drop of €0.06/kg on a weekly basis and the lowest value since late October 2021, ICIS data showed.

Natural gas-based hydrogen production methods, conversely, posted minor increases week on week, driven higher by a slight recovery on the Dutch TTF hub in early February.

Both front-month based unabated SMR and low carbon ATR hydrogen production held discounts of €2.69-3.09/kg below imported ammonia-for-hydrogen.

AMMONIA MARKET

The ammonia market in Europe continued to see pricing fall in value, with contracts for Europe falling at a faster rate than in other global regions.

Pricing for ammonia continues to come under pressure from a combination of rising production in Europe due to the recent drop in wholesale natural gas prices and negotiations surrounding the resumption of exports out of the Togliatta pipeline in Ukraine, which has not flowed since late February last year.

GAS MARKET

The ICIS Dutch TTF March contract failed to move below the €55/MWh mark in late January/early February and was seen edging up towards €60/MWh by the end of the week.

Nonetheless, pricing remains comfortably lower than in recent months due to the combination of broadly mild temperatures so far during the Winter 2022 delivery period and solid LNG volume deliveries limiting withdrawal requirements.

Storage stocks are currently at close to record highs for the time of year, which will limit injection demand in the coming months, with ICIS data showing that stocks in Germany began the 3 February gas day at 78% capacity against the 31% from the same time last year.