MARKET COMMENT: Northwest Europe ammonia-to-hydrogen production costs dip on energy complex

LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen price continued to shed ground in mid-November, but losses were not as pronounced as those seen on other forms of hydrogen production.

The ammonia-to-hydrogen price lost €0.11/kg on a weekly basis to stand at €6.11/kg on 16 November, the lowest figure in four weeks and €0.23/kg below the multi-month high seen in late October.

The ammonia-to-hydrogen price reflects the cost of importing fossil-based ammonia to northwest Europe and then decomposing that ammonia into hydrogen. The ammonia price referenced is the ICIS CFR Northwest Europe Duty Unpaid assessment, published every working Thursday.

Baseload electrolysis using Dutch front-month power prices gave back the previous week’s gains as wholesale power prices came under pressure, dropping €0.43/kg week on week to come in at €6.53/kg.

Low carbon hydrogen produced via steam methane reforming (SMR) with carbon capture and storage (CCS) attached using month-ahead Dutch gas also fell lower amid weaker commodity pricing, down €0.20/kg on a weekly basis to stand at €3.85/kg, a six-week low.

AMMONIA MARKET

Pricing in the ammonia market saw little support in mid-November with major spot demand remaining quiet. Some demand was seen to emerge from Europe for December delivery.

Contracted cargoes from both Trinidad and the US continue to arrive in Europe. Norwegian chemicals company Yara said that it would close urea and ammonia production at their Ferrara plant in central Italy for two months from the end of November, which could spur spot demand for volumes.

Elsewhere, Egypt is back up to full ammonia production capacity following natural gas supply issues, as is Saudi Arabia’s Ma’aden following the conclusion of maintenance.

The Asian market remains subdued with little demand from the region, with ammonia spot buyers expected to be out of the market until the end of 2023.

GAS MARKET

The ICIS Dutch TTF December ’23 contract was largely steady during week 46, trading around the €48/MWh mark early in the week before being pulled lower amid bearish fundamentals to be trading at €45/MWh at the end of the week.

Forecasts for Europe show that temperatures in the region will be either around seasonal norms or higher than the average for the time of year, limiting heating demand as a result.

Indeed, data from ICIS showed that since the beginning of November, gas stocks have actually seen a net increase of 2TWh compared to the net withdrawal of 9TWh recorded for the 1-17 November 2022 period.

Stocks were at 1,075TWh on 17 November, the data showed, 55TWh higher on an annual basis.