MARKET COMMENT: Northwest Europe ammonia-to-hydrogen production costs fall further towards €4/kg

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen assessment continued to fall in value as downward pressure on prices came from a weak ammonia market.

The ammonia-to-hydrogen northwest Europe assessment fell by an additional €0.03/kg on a weekly basis to stand at €4.15/kg on 8 June, losing value for the third straight week and less than half the €8.96/kg valuation from early January.

The cost in the Netherlands for low carbon steam methane reforming (SMR) hydrogen rose €0.23/kg on a weekly basis to reach €2.80/kg on 8 June after having dropped back to €2.57/kg at the start of the month, but still stood below the ammonia-to-hydrogen equivalent.

Baseload electrolysis in the Netherlands also rose as June progressed, pushed higher by the recovery on the European gas hubs, standing at €5.60/kg on 8 June after having dipped below the €5/kg mark at the beginning of June.

AMMONIA MARKET

Ammonia pricing continued to come under pressure from weak buying interest with Europe seeing particularly low ammonia consumption at the moment.

Indeed, market participants are expecting further declines in pricing with the European Commission contemplating extending the suspension of the 5.5-6.5% import duty on ammonia and urea from all origins except Russia and Belarus.

Some demand was heard from Turkey for early June cargoes, but US ammonia demand was seen as very low and production in Trinidad is back to normal levels as feedstock issues have been resolved.

GAS MARKET

The ICIS Dutch TTF July ’23 contract showed some signs of finding some support at the beginning of June, recovering from posting multi-year lows recorded right at the start of the month.

Additional concerns over Russian gas supply into the region in conjunction with demand potentially picking up in pace as temperatures increase and air-conditioning demand kicks in led to a recovery in the TTF prompt.

Gas stocks continue to grow at a slower pace than in previous years, with European stocks beginning 9 June with 196TWh in stock compared to 134TWh at the same time last year, ICIS data showed.

However, stocks were 68TWh higher on an annual basis at the beginning of June and were 81TWh up year on year at the start of May, the data showed.