Brazilian MAP prices holding despite surge in P2O5 stocks
European fertilizer market history will be made in around 10 days’ time when the first commercial shipment of blue ammonia ever marketed into the EU arrives at the Bulgarian port of Varna for Agropolychim.
Produced and sold by Saudi major Ma’aden, the 25,000t cargo of low-carbon spot material will be discharged at the Black Sea port by the LPG tanker Kallo on 27 June.
The shipment follows similar deliveries by the manufacturer and compatriot Sabic Agri-Nutrients to customers East of Suez, with clients in countries including South Korea, India, China and Taiwan, receiving volume created via a process involving carbon capture technology.
While small, demonstration cargoes of blue ammonia have been moved to Europe over the past year, the imminent delivery of substantial spot volume is expected to provide a boost to industry moves to encourage investment in reducing the sector’s carbon footprint.
Billions of dollars of capital expenditure have been allocated by industry giants and new entrants for low-carbon ammonia production capacity, with showcase projects gravitating towards the US Gulf given its favourable geographical position and lucrative fiscal incentives from the government.
Final investment decisions for some of those projects are expected before the end of this year, with cargoes from the region forecast to head to Europe, Northeast Asia and North Africa in just a few years’ time.
Producers in the Arabian Gulf and Asia Pacific are also seeking to secure a slice of the emerging low carbon market through substantial capital expenditure on carbon capture, utilisation and storage (CCUS) systems, with many green (zero-carbon) projects also in the pipeline.
Regardless of the colour, the key question facing producers, traders and buyers is how the new alternatives to grey ammonia will be priced and whether governments will need to dig into taxpayers’ pockets to persuade better take-up of the climate friendly grades.
To date, participants have yet to disclose if any of the independently certified blue shipments were procured at a premium to normal ammonia, but given prices have been way above historical highs amid widespread capacity curtailments in Europe, no additional costs are thought likely.
News of the ground-breaking delivery to Bulgaria – which will soon be followed by two more 25,000t blue cargoes from Saudi Arabia to Europe via Trammo – comes as the European Commission dithers over a decision on whether to suspend nitrogen fertilizer import duties for another few months.
The six-month suspension of 5.5% and 6.5% import tax on ammonia and urea, respectively, is due to expire this weekend, with many market players incredulous officials have left such an important ruling until the eleventh hour.
Several suppliers and buyers have been reluctant to commit to spot purchases for Q3 arrival into the EU until a decision has been reached.
By Richard Ewing, Profercy Head of Ammonia/Deputy Editor
Richard.Ewing@profercy.com
Related News
