INSIGHT: Arab Gulf ammonia prices to ease further in 2025 on market shares, demand

SINGAPORE (ICIS)–Arab Gulf (AG) ammonia annual average export price is forecast to ease further this year (see Chart 1) as producers are expected to keep prices competitive to maintain market shares in Asia, particularly as weak Asian demand for industrial applications including acrylonitrile (ACN) and caprolactam (capro) have capped ammonia prices.

AG ammonia producers are expected to maintain its export prices in 2025 at just below parity with southeast Asian producer with FOB AG at around 97% of FOB SE Asia prices (see Chart 2) to optimize returns while keeping market shares in their key India and Taiwan markets.

AG ammonia producers’ netbacks in Taiwan and India in 2025 are projected to return to levels similar to 2020 before the Russian-Ukraine war with AG FOB at around 89% and 84% of CFR Taiwan and CFR India prices, respectively (see Chart 3)

Asia remains an important market for AG producers particularly when their returns from Europe have been shrinking.

AG ammonia producers’ FOB netbacks from Europe is expected to remain constrained in 2025 with the FOB AG annual price hovering at around 63% of the CFR NWE annual price, following two years of higher returns in 2022 and 2023. (see Chart 4)

AG ammonia producers have not been exporting much to Europe except for 2022 and 2023 when outbreak of the Russia-Ukraine conflict and subsequent sanctions on Russian exports created a window of opportunity for AG producers. (See Chart 5)

Europe ammonia import prices are expected to remain elevated as high natural gas prices had led several ammonia plants in the region to be permanently shut in 2022, with the ammonia prices remaining tied to the prices of key exporters Trinidad and Algeria.

Egypt also exports ammonia to Europe, but its production has been susceptible to disruptions caused by natural gas shortages as seen in Q3 last year and February this year.

Europe import prices are expected to ease if Russia resumes exports to Europe hence a burning question for importers is when Togliattiazot’s (TOAZ’s) export terminal at Russia’s Taman Port would start loading ammonia.

TOAZ is part of the Uralchem Group, and the terminal was expected to start loading ammonia in Q1 this year.

Ammonia is a feedstock for inorganic fertilizers such as urea and ammonium sulphates and chemicals such as acrylonitrile (ACN).

With contributions from Song Hea Beom, Sylvia Traganida