Northwest Europe ammonia-to-hydrogen production costs set new 15-month low

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen assessment continued to drop in value in week 9, hitting a fresh 15-month low, on the back of muted ammonia demand and weaker European natural gas prices.

The ammonia-to-hydrogen northwest Europe assessment fell by a further €0.08/kg on a weekly basis to €6.64/kg on 2 March, the lowest valuation since October 2021.

Natural gas-based hydrogen production methods fell at a faster rate over the week with continuing pressure on the gas hubs in Europe, with a large storage overhang expected heading into the injection season.

Both front-month based unabated steam methane reforming (SMR) and low-carbon autothermal reforming (ATR) hydrogen production held discounts of €2.71-3.05/kg below imported ammonia-for-hydrogen.

AMMONIA MARKET

The ammonia market in Europe remained sluggish, with demand muted in many other regions leading to little support for pricing for the commodity.

Currently, domestically-produced ammonia in Europe is cheaper than imports due to the drop on the European gas hubs, with no demand seen for cargoes to be shipped into the region as a consequence.

The lack of demand for cargoes has seen a limited impact of firmer ammonia usage in Asia, with Chinese domestic prices increasing so most Chinese suppliers are no longer exporting cargoes.

GAS MARKET

The ICIS TTF April contract failed to rise back above the €50/MWh mark during week 9 trading with the gas network in Europe well supplied at the end of February and into early March.

Robust LNG supplies into Europe have continued, more than compensating for colder temperatures in addition to elevated storage stocks that have been called upon to balance the system.

Despite the fact that withdrawal rates have risen recently, gas stocks across Europe remained at 60% capacity at the beginning of the 3 March gas day, more than double the 29% from the same time in 2022, ICIS-collated data showed.