The Outlook Ammonia is published monthly and covers the global market. Our reliable and trustworthy report gives detailed news and analysis on key drivers, price forecasts, demand and supply patterns, deals and visual data, as well as any other pertinent factors influencing the market at the time of publication. This information can allow you to make informed business choices by keeping you abreast of price movements that are likely to impact short-term trades and strategies over the next 12 months. These are produced by Integer Research on behalf of ICIS.
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The Outlook Ammonia: Market overview
Updated to Q1 2018
A loosening of the supply/demand balance east of Suez means bullish conditions should end soon. The early January restart of the SAFCO IV plant in Saudi Arabia returns a lot more material to the market, while Egypt's EBIC-OCI is also running well. Market attention is focused on Indonesia as Mitsubishi prepares to load material from the new PAU plant, and KPI is poised to sell volumes directly rather than supply them to Trammo.
Spot demand is seen as stable in Korea and Taiwan, although there has been a notable uptick in spot enquiries from buyers on both coasts of India for Q1 cargoes. In Korea, LFC will soon receive the first slice of the 550,000 tonnes agreed for contract delivery during 2018, while Namhae will take delivery of the first cargo under its agreements for a combined 490,000 tonnes over the next 12 months.
The restart of major plants in North Africa (Sorfert Algeria) and Saudi Arabia (SAFCO IV) in late 2017/early 2018 saw the supply situation improve noticeably, triggering talk that prices may have peaked and will shortly stablise and soften. With new capacity in the US and southeast Asia due onstream in the coming weeks, market players are generally bearish, although start-up delays at the export-oriented PAU plant in Indonesia mean Mitsubishi may require an additional 150,000 tonnes during the quarter.
Strong spot demand for first-quarter cargoes has been noted from players in India, with regular spot buyers FACT and Deepak seeking parcels for early 2018 delivery to the west coast. On the east coast, CIL has been heard in the market for material, but price targets remain elusive for now. Koch acquired 40,000 spot tonnes from Sorfert Algeria for mid-January loading at $340/tonne FOB and is chasing an identical-sized cargo for February loading - amid talk one of its plants in the Americas is facing maintenance.
Production has stayed steady in the US and without additional capacity expected in the short-term and no plans revealed for turnarounds in 2018, the outlook for inventory levels immediately is to stay consistent.
With farmers expected to plant significant acreage of corn domestic demand will once again be strong but may not fully emerge in Q1 but rather start slowly depending on any weather issues in the key regions.
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The Outlook Methodology
About The Outlook Ammonia
Ammonia is one of the main sources of nitrogen in fertilisers, as it contains 82% of nitrogen (N), which is essential for the life of plants. Ammonia (NH3) is produced through a chemical reaction (electrolysis). Most of the world’s ammonia production is based on the Haber-Bosch process which was developed by BASF in 1910.
It involves the reaction of hydrogen and nitrogen in the presence of a catalyst under high temperatures and pressures. The hydrogen is usually obtained by the steam reforming of natural gas (methane) but can also be made from the partial oxidation of naphtha and the gasification of coal. The nitrogen is usually obtained by the liquefaction of air.
This reaction requires a large amount of energy and, nowadays, this is provided mainly in the form of natural gas, as it is the most economic, but there are still some ammonia plants, for example in China and Japan, which operate based on naphtha and coal.
Since the 1970s, the production of ammonia, which was born in Europe, has gradually migrated to countries rich in cheap natural gas, such as Russia, Ukraine, Trinidad, Libya, Algeria, Egypt, the Arab Gulf and Indonesia .