Ammonia-to-Hydrogen assessments drop as premium to low carbon hydrogen tightens

Gary Hornby

04-Nov-2022

LONDON (ICIS)–The ICIS ammonia-to-hydrogen Northwest Europe assessment posted losses for a fourth straight week as bearish sentiment remained in the ammonia market as production of the commodity continued to recover.

Yara has increased its production across Europe from 35% to 65%, the company confirmed. Austria’s Borealis has also restarted ammonia production at its plant in Grand-Quevilly, near Rouen, France.

SKW Piesteritz, Grupa Azoty, Neochim and BASF are some of the other fertilizer companies that have resumed production recently.

Lithuania’s Achema is understood to have restarted fertilizer production on 28 October. According to data from Amber Grid, the Lithuanian gas transmission system operator. There are no details about which lines are running or current run rates.

The situation relating to production remains delicate since European producers are braced for gas prices firming again once temperatures start to fall across Europe drawing on gas reserves and availability.

The rise in European ammonia production has pressured the spot market for imports, resulting in lower ammonia-to-hydrogen production costs.

Ammonia-to-hydrogen production costs on a breakeven basis were assessed at €11.16/kg on 3 November, a drop of €0.30/kg compared with the same time last week.

Prices for hydrogen produced with natural gas as a feedstock posted an increase on a weekly basis as European gas hub contracts showed signs of a recovery from the recent losses.

Outages on the Norwegian Continental Shelf allied to forecasts of colder-than-average temperatures over northwest Europe spurred buying interest in the near curve.

The Dutch Low Carbon ATR Hydrogen Month+1 assessment rose by €0.96/kg on the week to be assessed at €7.67/kg.

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