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 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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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 .