High natural gas prices, European fertilizer giants cut production and halt production

In the chain reaction triggered by the European natural gas crisis, fertilizer giants such as CF Industry, Yara, Borealis, and OCI of the Netherlands have announced production cuts. In addition, some nitrogen fertilizer producers are also cutting production.

US nitrogen fertilizer giant CF Industry took the Lead in issuing a statement on September 15 that due to high natural gas prices, the company will cease operations at its Billingham and Ince plants in the United Kingdom.

It is reported that the Billingham Plant of CF Industry is a production complex that produces ammonium nitrate fertilizers. The Ins Plant produces 1 million tons of fertilizers each year. The total Ammonia production capacity of these two plants is 730,000 tons/year.

Yara International Group, the largest fertilizer producer in Europe, said on September 17 that record-setting natural gas prices in Europe are affecting the profitability of ammonia production. Therefore, it is reducing the output of many factories and cutting European ammonia production by 40%.

In an interview with the media, a Yara spokesperson stated that Yara’s ammonia fertilizer production capacity in Europe is about 4.9 million tons per year, and about 2 million tons are affected this time, involving factories in the Netherlands, Italy, Britain and France, Germany and Norway. The factory already has a maintenance plan and will further reduce production capacity.

The Dutch fertilizer giant OCI said last week that high production costs have led to the partial closure of the ammonia production unit at the Geleen plant.

Due to soaring natural gas prices, another European fertilizer producer is cutting production, which has exacerbated the already tight supply across the European continent.

Borealis,headquartered in Austria, said on the 23rd that it is reducing its ammonia production in Europe and will "further analyze the situation of its plants in Austria, France and the Netherlands."

IHS Markit predicts that Europe’s current closure of synthetic ammonia production capacity totals 4.6 million tons per year.

This year, the price of synthetic ammonia in Northwestern Europe has risen sharply, from about US$300/ton in January to US$660-700/ton in September. At present, synthetic ammonia producers of natural gas feedstock in Northwestern Europe have a natural gas break-even price of 16-19 US dollars per million British thermal units under the Ammonia price of 660-700 US dollars per ton, which is lower than the current natural gas price of 21-22 US dollars per million. British thermal unit.

IHS Markit said that the closure of synthetic ammonia production capacity in Europe will affect the price of synthetic ammonia. Recently, the price of ammonia is very sensitive to the supply interruption, and it is expected that the price of ammonia will rise. But urea may still be in a break-even state.

The British business analysis and consulting company CRU Group believes that from the current natural gas prices and futures prices, nitrogen fertilizer plants in Western and Eastern Europe and Ukraine are currently producing negative ammonia profits. Therefore, it is expected that these areas will further close factories.