UK’s Fertilizer Crisis Spreads To EU After Another Firm Slashes Output
Europe’s energy crisis has claimed another victim, with Austrian fertilizer producer Borealis AG slashing the output of ammonia after the cost of the primary feedstock, natural gas, compresses margins in an industry already facing tight supplies, according to Bloomberg.
Borealis’ ammonia-producing plant uses natural gas to make fertilizer. The high cost of natgas makes fertilizer uneconomical to make. This is yet another sign of deepening woes for the industry after the UK government said it would provide “limited financial support” to help CF Industries restart one of its fertilizer plants this week.
The culprit behind surging natgas prices has been declining flows into Europe via Russia, though there are signs natgas shipments could increase in November. But that won’t alleviate high prices because stocks on the continent are well below average ahead of the winter season, indicating Europe’s energy crisis may drag on for months.
Disruptions of ammonia supply and other fertilizers have had a significant impact on the production of carbon dioxide supply in the UK, sending the industry into a tizzy and rippling through food supply chains, such as slaughterhouses to packaging to carbonated drinks to dry ice production.
Commodity analysts at CRU Group said half the continent’s ammonia capacity could be at risk due to dwindling production because of elevated natgas prices. Spot prices of ammonia per ton in Western Europe have surged from around $225 per ton at the beginning of the virus pandemic to $700 per ton this month.
Borealis’ reduction in ammonia production is a sign the fertilizer crisis continues to ripple across the continent. The company said Thursday it would analyze the situation” regarding its plants in Austria, France, and the Netherlands – not much detail was given.
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