DThe sharp rise in raw material prices has also triggered turbulence in the fertilizer market. This is evident in the price of ammonia, which is a chemical product used to make agricultural fertilizers. An important intermediate product for the production of ammonia is natural gas. Due to the strong demand after the end of the new crown epidemic, the price of natural gas has risen to a record high.
As a result, the European Ammonia Price Index climbed to a 13-year high of US$910 per ton at the end of October, and has recently been only slightly below that price to US$907 (see chart).According to financial data services, the European Ammonia CFR Spot Price (Western Europe Ammonia CFR Spot Price) hits a record high Bloomberg It was US$930 per ton in September 2008.
According to the European Fertilizer Industry Association, the price of natural gas accounts for 80% of the cost of nitrogen fertilizer production in Europe. European Union Finish. Therefore, the association warned that if the factory is moved to a location outside the EU, the fertilizer industry will not only face a temporary standstill, but also a permanent standstill. According to the Fertilizer Association, the production gap may affect the harvest in the coming year. In addition, the shortage of ammonia has affected the supply of AdBlue, a urea solution, and diesel-engined trucks, cars and locomotives rely on it to reduce nitrogen oxide emissions. The important issue of ammonia price increases does not only exist in Europe.
The US ammonia price index also climbed. At the end of September, the chemical company BASF announced that it would reduce ammonia production at its Ludwigshafen and Antwerp plants because the increase in natural gas prices has worsened the economic operating conditions of the plants. At the end of October, the SKW nitrogen plant in Saxony-Anhalt, Piesteritz, announced that it would further reduce its ammonia production by 30% after the drastic reduction announced in early October. According to SKW, Germany’s largest producer of ammonia and urea, fertilizer distributors are currently not ready to pay the price the company deems necessary. The price of natural gas has risen more than five times.
Ammonia is composed of nitrogen and hydrogen, so the hydrogen required for production is mainly from natural gas, which becomes more expensive. At the beginning of the 20th century, German chemists Fritz Haber and Carl Bosch developed a process that is still used today to achieve large-scale production of ammonia. For this invention, they won the Nobel Prize in Chemistry. Artificial fertilizer can feed the explosive growth of the world’s population because it ensures the quantity and quality of agricultural food production.
If the price of ammonia increases and the price of nitrogen fertilizer rises sharply, this may increase the price of agricultural products and food. Therefore, people are increasingly worried that inflation, that is, rising consumer prices, may consolidate. However, suppliers and manufacturers can protect themselves from violent fluctuations in the prices of raw materials and agricultural products through hedging transactions. In addition to nitrogen fertilizers, there are other types of fertilizers, some of which are produced using other raw materials. This can at least curb price increases.
