MARKET COMMENT: Northwest Europe ammonia-to-hydrogen production costs flat in mid-May

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen assessment remained steady in mid-May with ammonia pricing largely unchanged on a weekly basis.

The ammonia-to-hydrogen northwest Europe assessment rose by a mere €0.01/kg on a weekly basis to be assessed at €4.56/kg on 18 May, and up €0.09/kg from the assessment seen on 4 May.

The cost in the Netherlands for low carbon steam methane reforming (SMR) hydrogen posted strong losses during the week amid a bearish prompt market on European natural gas hubs, down €0.27/kg to be assessed at €2.97/kg, extending its discount to the ammonia-to-hydrogen equivalent.

Baseload electrolysis in the Netherlands fell by a similar amount as the weaker gas market weighed on wholesale power pricing, falling by €0.34/kg on the week to end at €5.70/kg, still a solid €1.14/kg premium to the ammonia-to-hydrogen peer.

AMMONIA MARKET

Pricing for ammonia was mostly unchanged on a weekly basis with the market looking for direction ahead of the International Fertilizer Association annual conference 22-24 May.

In Europe, demand from the nitrates and urea markets was flat, and buying demand in both Turkey and northwest Europe is set to be determined by the level of domestic production which is linked to the European gas hubs.

On the supply side, production at the TRINGEN II asset in Trinidad is expected to be back to normal on the restoration of gas supply to the plant after gas supply issues to the island.

GAS MARKET

The ICIS Dutch TTF June ’23 contract was seen trading below the €30/MWh mark in the latter part of week 20 with bearish sentiment hovering over the market as demand weakens with the Summer ’23 delivery period progressing and gas storage levels increasing.

Data from ICIS showed that European gas stock were 739TWh (70 billion cubic metres) at the beginning of the 19 May gas day, about 66% full, in comparison to the 469TWh at the same time in 2022.

The rate of the stock build has been slower on an annual basis so far in May, with stocks climbing by 59TWh during the 1-18 May gas days this year against the 90TWh from the same period last year.

Nonetheless, if the 1-18 May injection rate is maintained, 100% stock levels would be hit by mid-September.