MARKET COMMENT: Northwest Europe ammonia-to-hydrogen production costs now above baseload electrolysis

Gary Hornby


LONDON (ICIS)–The ICIS Northwest Europe ammonia-to-hydrogen price fell below the baseload electrolysis equivalent in mid-January as ammonia pricing remained stable amid falls in both natural gas and electricity wholesale markets across northwest Europe.

The ammonia-to-hydrogen price was unchanged on a weekly basis at €5.30/kg, while other forms of hydrogen production fell lower.

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, fell by nearly €0.50/kg week on week to stand at €5.05/kg on 18 January. This is a €0.25/kg discount to the ammonia-to-hydrogen equivalent and the first time that baseload electrolysis has been below ammonia-to-hydrogen for over a year.

Low carbon hydrogen produced via steam methane reforming (SMR) with carbon capture and storage (CCS) attached using month-ahead Dutch gas fell to a fresh six-month low of €2.84/kg following a €0.15/kg weekly drop in value.


Ammonia pricing was largely stable in mid-January despite the fact that demand remained weak and availability continued to be comfortable.

The volatile situation in the Red Sea offers some risk in the market, but with the general lack of demand for spot volumes, shipments heading around the Cape of Good Hope have yet to translate into supply tightness.

Furthermore, European market participants have yet to see any ramping up of ammonia production with the weaker gas hub levels across the region and demand being covered by contract cargoes.


The ICIS Dutch TTF February ’24 contract has so far held below the €30/MWh mark as there is little appetite for market participants to hedge longer positions under current conditions.

Milder weather and warmer temperatures are due to move over Europe in the days ahead. This is set to see heating demand ease back as a result and release some pressure on storage withdrawals to balance the market.

Additionally, the diversion of LNG cargoes away from the Suez Canal due to escalating Houthi attacks in the Red Sea has seemingly failed to spook traders, as volumes continue to arrive from the US unaffected by the situation.

Qatari volumes may be diverted around the Cape of Good Hope, but with ample storage stocks and weaker demand on the horizon, a delay of a few days in Qatari LNG arrivals is not expected to see a shortage of supply.


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