One of Europe’s largest nitrogen fertilizer producers halts production amid high gas prices and weak demand

AGF Nitrogen, one of Europe’s largest producers of ammonia and nitrogen fertilizers, has begun shutting down some production lines due to a sharp increase in natural gas prices and weakening fertilizer demand. According to CEO Petr Cingr, additional capacity could be shut down within the coming weeks unless market conditions improve. The company’s plants are currently operating at 80–85% capacity, the minimum technically viable operating level.

The main reason for the production cuts is the rising cost of natural gas, which serves as a key feedstock and energy source for ammonia and nitrogen fertilizer production. European gas prices exceeded €100/MWh over the past week and stood at around €90/MWh on November 4, approximately three times the level recorded before the escalation of the conflict in the Middle East in late February. Due to high costs, AGF Nitrogen has already shut down one production line in France, while another is operating intermittently. At facilities located near seaports, the company has begun replacing domestic ammonia production with imports.

Meanwhile, fertilizer demand from European farmers has fallen to a fraction of normal levels, as high prices discourage purchases ahead of the new season. Industrial ammonia consumption has also declined by approximately 50%. According to AGF Nitrogen’s management, further accumulation of finished products could force the company to shut down additional capacity due to limited storage availability. Restarting each production line costs several million euros.

AGF Nitrogen operates eight production lines in France, Germany, Slovakia and Austria, with a combined annual capacity of 3.5 mln tons of ammonia and 7 mln tons of fertilizers. According to the company, it accounts for around 20% of the European market. Its facilities consume approximately 30 TWh of natural gas annually. Despite difficulties in fertilizer production, demand for AdBlue, a urea-based product used to reduce nitrogen oxide emissions from diesel engines, remains stable.

Amid market uncertainty, AGF Nitrogen is also suspending investment projects until the long-term outlook for Europe’s chemical industry becomes clearer. The company’s management is calling on the EU to introduce gas price caps for industrial consumers and reduce carbon allowance costs for producers of essential chemical products. In addition, the company supports government assistance for farmers’ fertilizer purchases, which could stimulate demand and reduce the risk of further production cuts.

Tags: EU, fertilizers, nitrogen fertilizers, AGF Nitrogen