The fertiliser market has entered another period of turmoil after a quieter few months. The price of natural gas has surged during August as Russia has restricted supplies through the major NordStream 1 pipeline and has announced plans to shut it down completely for a number of days in September for ‘maintenance’. This has seen an increase in gas prices on the EU market with values now back to the levels seen in early march, just after the Russian invasion of Ukraine. World prices have also increased as customers look for alternative supplies. Natural gas is the main feedstock for nitrogen fertiliser production. At current gas prices the production of fertiliser is uneconomic and there have been plant shut-downs across Europe.
The largest nitrogen fertiliser producer in Poland, Grupa Azoty, announced it has halted production, whilst the second-largest manufacturer in the country, Anwil, is doing the same. The major Lithuanian producer, Achema will shut its plants from 1st September. All of these companies are major suppliers of imported ammonium nitrate (AN) to the UK. Availability is likely to dwindle away over the next few weeks as stocks are used up.
Here in the UK, CF Fertilisers announced on the 24th August that it was going to cease ammonia production at its Billingham plant (the Ince plant in Cheshire has been permanently closed form some time). The company has stated that it will use imported ammonia to produce AN to fulfill contracts over the coming months. Although AN production is not ceasing, it seems possible that production will be at a fairly low level just to meet orders already placed. There may be little new tonnage placed on the market. This may not appear a huge issue for UK farmers as nitrogen is not a key requirement during the autumn/winter period. However, the fertiliser plants run year-round to produce the volume of product required for the sector – with much being stored until it is needed in the spring. If factories are not running, orders not being placed and deliveries not being made then this stores up significant problems for next year. With all these closures, it seems that (imported) urea will be increasingly important in meeting UK crop nutrition needs.
More of an immediate concern than fertiliser is probably CO2 availability. This is a by-product of ammonium production and has a variety of uses in the food chain – including stunning pigs and poultry prior to slaughter, expelling air in food packaging and carbonating drinks. Readers may recall that, when the CF plants were previously closed last Autumn (see September Bulletin) it was the shortage of the CO2 that caused major problems. So much so, that the Government stepped in and offered financial support for the Billingham plant to be re-started. Defra is confident that, compared to previous CO2 shortages, there is now a more resilient system with greater domestic production (including access to CO2 from AD plants), increased levels of stocks, and more secure access to imports. It must be hoped that this is the case, but the UK’s second-largest source of CO2, the Ensus biofuel plant, is due to be closed for maintenance for some of September. If Co2 supplies prove adequate it will mean that any Government assistance to restart ammonia production at CF plants is unlikely in the short-term.