The gas crisis is having a tremendous impact on the production and price of UK-manufactured ammonium nitrate.
Surprisingly, demand for gas has been no greater than in previous years, so high prices must be a response to fears of inadequate future supply.
Fertiliser produced at today’s gas price would significantly exceed 200/t.
Terra has responded by turning down production and using bought-in ammonia at Teesside, but must continue to use gas at Severnside, maximising the use of gas at lower forward market prices.
Kemira chose the best time to shut down ammonia production for maintenance and is using bought-in ammonia to make fertiliser.
Ammonia at $367/t (216) equates roughly to gas at 55p/ therm.
Daily UK gas prices have peaked at 1.80/therm.
The company has some AN available at 165/t pre-Christmas and 175/t for January, but cannot hold these prices much longer.
Terra withdrew all prices late last week and is expected to post 173/t for January and even more for the spring.
Compounds are up by about 3/t, but will rise by 10/t in January.
The hope is that grassland farmers will buy before Christmas.
However, no-one seems to be buying, adopting a wait-and-see approach instead.
The size of the market to come remains a massive unknown.