To maintain their profitability, several European fertilizer manufacturers are ceasing their production of ammonia, obtained by combining nitrogen from the air and hydrogen from natural gas.
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They are essential for farmers. Fertilizers are however becoming unaffordable, alerting industrialists and market analysts, a consequence of the increase in the price of gas with the war in Ukraine. Synthetic fertilizers called NPK – made from nitrogen, phosphorus or potash – have never been so expensive: international prices have tripled between the beginning of 2021 and mid-2022. In Europe, NPK fertilizers are at a level “historical“, because they are indexed to gas prices – which constitute 90% of the production costs of nitrogen fertilizers such as ammonia and urea.
To maintain their profitability, several European fertilizer manufacturers are ceasing their production of ammonia, obtained by combining nitrogen from the air and hydrogen from natural gas. Something that hadn’t happened since the 2008 financial crisis.”We have a big problem: it no longer works for all those who manufacture ammonia, because the gas is 10 to 15 times more expensive than before“, explains to AFP Nicolas Broutin, boss of the French subsidiary of the Norwegian producer Yara, European number one in nitrogen fertilizers. Yara announced Thursday that it was going to further reduce its ammonia production in Europe because of the price of gas. , using only 35% of its production capacity on the old continent.
This week, the first Polish producer Azoty announced that it was suspending 90% of its ammonia production, and the first Lithuanian producer Achema also announced the shutdown of its plant on September 1. In Hungary, Nitrogenmuvek is shut down, and the Borealis plant at Grandpuits in France is due to shut down in September and October, according to a publication by analyst firm Argus.
“The risk of shortage if all of Europe stops is real, there may be a resource problem because we manufacture fertilizers in winter in anticipation of spring 2023“, adds Mr. Broutin. The UN boss recalled that Russian fertilizers and agricultural products were exempt from sanctions and should have free access to world markets “unimpeded“, at the risk of a global food crisis in 2023.