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Wave Of European Ammonia Plant Closures To Exacerbate Food Crisis

Wave Of European Ammonia Plant Closures To Exacerbate Food Crisis

A wave of European ammonia-plant shutdowns due to soaring natural gas prices has resulted in a devastating fertilizer crunch, worsening by the week, with as much as 70% of production offline.

“Ammonia prices, though volatile, rose 15% in 3Q and could climb higher as Europe’s record gas prices curtail output and send ammonia producers to the global market in search of replacement supplies to run upgrade facilities — with winter still around the corner,” Bloomberg Intelligence’s Alexis Maxwell wrote in a note.

As of Friday, 70% of capacity is offline across the continent, according to Fertilizers Europe, representing top regional producers.

“The current crisis begs for a swift and decisive action from EU and national policymakers for both energy and fertilizer market,” Jacob Hansen, director general of Fertilizers Europe, said in a statement.

Producers from Norway’s Yara International ASA to CF Industries to Borealis AG recently reduced or halted production because European NatGas prices hit a record high of 343 euros per megawatt hour, making it uneconomical to operate.

“We confirm we are reducing and stopping production of some fertilizer plants in the different EU sites and this for economic reasons,” a spokesperson for Borealis AG said. 

Europe’s benchmark NatGas price soared nearly a third this week as Russian supplies to Europe via Nord Stream 1 pipeline have been reduced to 20% over the summer and face a temporary halt on Aug. 31 for three days.

The region’s fertilizer industry association warned the energy crisis is rippling across many industries and could heavily impact the food industry.

“We are extremely concerned that as prices of natural gas keep increasing, more plants in Europe will be forced to close.

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