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Ammonia: Market overview
Updated to Q3 2018
As in other regions, plant turnarounds will squeeze supply in July and August, although the long-awaited start-up of the PAU Indonesia facility could spark spot activity if Mitsubishi is unable to place inaugural export volumes with contract partners. Yara’s 850,000 tonne/year Australian plant began a turnaround in late June and will not restart until early August.
As in the previous quarter, China is expected to lead the way for Asia Pacific spot demand with buyers in Korea and Taiwan largely covered by contract cargoes. Cargoes from the Black Sea, Trinidad, and the Arabian Gulf should head to Chinese ports, while demand from Indian spot buyers is expected to rebound.
Assuming plants across Europe exit scheduled turnarounds without a hitch, ammonia capacity should return to normal during the quarter. Anyone needing to import material may struggle to source tonnes given major plant shutdowns both sides of the Suez for July and August, with spot cargoes likely to attract a hefty premium.
No major uptick in ammonia import demand is expected over the coming three months, with the vast majority of agricultural and industrial buyers covered by contract deliveries. Due to the summer holiday season, July and August are traditionally among the quieter months for spot business in Europe.
Domestic supply is expected to increase by 750,000 tonnes with the final commissioning of the Yara/BASF joint venture at Freeport well underway, and commercial production set to start in July. Scheduled plant shutdowns in Trinidad, including a plant operated by Nutrien, means the extra volume from the Texas JV will be welcomed.
Ammonia import demand is not expected to change much during the quarter, although domestic inventories are heard relatively low, meaning strong refill demand could emerge as the quarter progresses. Upticks in the Tampa CFR contract price may encourage buyers to place their orders earlier than usual given bullish market conditions globally amid plant shutdowns.
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Ammonia is a colourless, highly water-soluble gas with an intense, pungent, suffocating odour. It is alkaline and caustic, corrosive to copper and galvanised surfaces and is a powerful irritant. It is soluble in chloroform, ether and is easily liquefied under pressure. Liquid ammonia will attack some forms of plastics, rubber, and coatings.
Ammonia's major use is as a nitrogen source in fertilisers where it is both applied directly and used to produce derivatives including ammonium nitrate, urea, ammonium phosphates and ammonium sulphate.
Urea plants are integrated with ammonia production as they require the carbon dioxide by-product from ammonia units.
Ammonia also has a number of industrial end uses. Ammonium nitrate is used to make explosives while the medical grade is decomposed to nitrous oxide (laughing gas). Ammonium bicarbonate has applications in baking powder formulations, in fire extinguishers and as a blowing agent in the manufacture of polymers.
Ammonia is used in the production of hexamethylene diamine (HMDA) for nylon, acrylonitrile (ACN) for fibres and plastics, caprolactam for nylon, isocyanates for polyurethanes, and hydrazine.
Other uses for ammonia include as a refrigerant, a cleaning and bleaching agent, and a household cleaner. It is also used in metal treating operations.