In Europe, some ammonia producers are showing signs of either reducing or contemplating cuts to their production. “Maintaining the competitiveness of the European fertilizer industry is crucial not only for the manufacturers themselves but also for the stability of the fertilizer market, agricultural production costs, and food security,” stated Marcin Celejewski, President of Grupa Azoty.
Natural gas prices in Europe have reached their highest levels since January 2023. Although Russia continues to sell liquefied gas, the ongoing conflict regarding the Strait of Hormuz has severely restricted supplies from the Middle East, forcing Europe to pay exorbitant prices for this energy source.
Rising Gas Prices Challenge Fertilizer Market
This situation poses a challenge not only for direct gas consumers. “The European fertilizer market remains under pressure from high and volatile gas prices, which are essential raw materials in the production of ammonia and nitrogen fertilizers,” commented Marcin Celejewski.
He noted that this pressure may persist in the coming months. This is particularly concerning as Europe enters the winter season with relatively low gas reserves, and the reduction of some LNG supplies further intensifies competition for this resource.
Market Response to Increasing Gas Costs
It is already evident that some producers in Europe are either scaling back or considering cuts to ammonia production as the ratio of fertilizer prices to gas costs no longer guarantees adequate profitability.
For Grupa Azoty, the situation is critical, especially as the company is currently utilizing its production capacity while responding to market demand following an ongoing maintenance period. They are closely monitoring the gas market, as availability and price remain key factors influencing production economics.
