Lower gas prices lower nitrogen fertilizer prices

Gas prices in Europe continue to fall under pressure from large inventories, warm weather and increased LNG supplies, which will lower nitrogen fertilizer prices and help lower crop costs.

At the TTF hub in the Netherlands, June futures fell to €35.06/MWh or $398.1/1,000 cubic meters. The last time such prices were recorded was in July 2021, when Russia first began to block energy supplies to Europe. It is worth recalling that in pre-crisis 2019, the average TTF cost was less than €15/MWh.

Gas storage facilities are currently 62% full, and LNG deliveries from terminals to Europe’s gas transportation system reached an all-time high of 12.07 billion cubic meters in April. The pace of LNG deliveries also remains high in May.

In April, the actual sales price of gas produced in Ukraine decreased by 25% compared to March, from UAH 18,680.83 to UAH 14,382.34/1,000 cubic meters, which is the lowest value since the calculation of this indicator began in March 2022, the Ministry of Economy reports . We will remind you that the average price of gas is calculated according to the formula for the purpose of calculating rent for the use of subsoil in accordance with the provisions of the Tax Code of Ukraine.

World prices for urea, which at the beginning of spring reached 500-530 €/t, have now dropped to 400-420 €/t, however, the decrease in prices in Ukraine is almost imperceptible. At the same time, Dmytro Firtash’s Group DF (OSTCHEM) holding company exports urea to Romania at a price twice as low as in the domestic market of Ukraine, the “Chem-Courier” agency reports.

“According to transport companies, in May the Azot plant (Cherkasy) plans to deliver 3 thousand tons of urea to Romania, and for May 1-7 it has already exported 1.4 thousand tons of fertilizers at a price of $357/t DAP Vadul-Siret2, – the message says.

For comparison, OSTCHEM offers domestic farmers urea at UAH 29,000/t including VAT or $653/t (according to price data as of 05/10/23). In 2022, the holding’s factories increased urea production by 4.7 times compared to the previous year – from 22.8 to 106.5 thousand tons.

At the end of April, the European Union began forming a pool of buyers and sellers of natural gas in order to avoid sharp price jumps that shocked the energy markets last year. Therefore, there is hope that next year the gas market will be quite stable, and there will be no sharp increase in the price of gas and, accordingly, nitrogen fertilizers.

Tags: prices, fertilizers