High gas prices in Europe are causing fertiliser plants to shut down production, resulting in millions of tonnes of nitrogen fertiliser being taken out of the European fertiliser market.

Production has been either stopped or curtailed at plants belonging to Yara, CF Fertilisers, Azoty, Anwil, SKW Piesteritz and Achema.

Many of these companies supply the Irish fertiliser market.

Polish company Azoty this week stopped the production of nitrogen fertiliser due to high gas prices.

“As a consequence of Russia’s aggression against Ukraine since February 24 2022, natural gas prices on the European exchanges have been soaring to extraordinary, historically high levels.

“Over the past six months, gas prices surged from €72/megawatt hour (MWh) on 22 February 2022 to €276/MWh on 22 August 2022,” the company said.

It said that although there are no problems with the availability of gas, the current situation in the gas market, which determines the profitability of production activities, is extraordinary and completely beyond the company’s control and could not have been predicted.

Uneconomical

CF Fertilisers, the UK’s biggest fertiliser producer, has said it will temporarily halt ammonia production at its Billingham site due to the current market conditions and it being “uneconomical” for the company to make the product.

CF Fertilisers has not yet determined the exact date when it will begin the shutdown in production.

“At current natural gas and carbon prices, CF Fertilisers UK’s ammonia production is uneconomical, with marginal costs above £2,000 (€2,372.58) per tonne and global ammonia prices at about half that level,” it said.

It added that cost of natural gas prices “is more than twice as high as it was one year ago” on the UK’s national balancing point, the gas spot price in the marketplace, with prices expected to continue to rise in the months ahead.

Yara

Yara has also announced that it will be curtailing ammonia production in Europe.

“As a result of record high gas prices in Europe, Yara is implementing further curtailments, which will take its total European ammonia capacity utilisation to around 35%.

“With this, Yara will have curtailed an annual capacity equivalent of 3.1m tonnes ammonia and 4.0m tonnes finished products across its production system in Europe,” it said on Thursday.

This will result in the loss of 1.8m tonnes of urea, 1.9m tonnes of nitrates and 0.3m tonnes of NPK from the European market.

“Yara will, where possible, use its global sourcing and production system to optimise operations and meet customer demand, including continued nitrate production using imported ammonia when feasible.

“Yara will continue to monitor the situation and adapt to market conditions going forward,” it added.

EU supply

Earlier this month, Fertilizers Europe, which represents 17 fertiliser manufacturers across Europe, warned that the EU “needs to support a strong local fertiliser supply as the best guarantee of fair and free competition for fertilizer supply to farmers and their provision of food security and food supply to European citizens and the wider world too”.