Gas price fiasco forces Terra to close plant

The UK’s biggest fertiliser manufacturer is shutting down one of its ammonia plants in response to the high price of natural gas.

Terra Nitrogen announced on Wednesday (Nov 30) that its US parent wanted the ammonia plant in Billingham, Teesside, to be turned off until prices fell.

President of the US group, Michael Bennett, said: “We remain committed to resuming normal production at our UK facilities as soon as natural gas costs return to more reasonable levels.

“Restricted gas flows into the UK during recent cold weather have driven its natural gas prices to more than double the level elsewhere in Europe.”

Fertiliser director Stuart Beer insisted Nitram production would continue unabated from stocks and imports of ammonia, adding that sales would pick up.

“I’m pretty confident we’ll sell January fertiliser at £170/t. I’ll go out at a higher price in February and see if there are any takers.”

He forecast a carry of £2-3/t for the February and March list prices, which have not yet been published.

The closure of the Teesside ammonia plant means the gas must now be imported from abroad.

Mr Beer said the world ammonia price may increase on the back of Terra’s heavy demand, but insisted that at 55p/therm equivalent, it was still cheaper than using natural gas.

Recent day-ahead spot prices for gas are still hovering around the 100p/therm mark, back from highs of 170p/therm last week.

The government has challenged the European Commission to launch an inquiry into the imbalance between UK and EU gas prices.