Unprecedented shutdowns have heralded the New Year as European gas prices make it uneconomical for fertiliser producers to manufacture ammonia.
Just as the usage period is about to begin, and with an estimated 1.5m tonnes of fertiliser business still yet to be done in Britain, the Kemira plant in Cheshire and the Terra plants at Tees and Severnside remain closed.
The same is true of Yara and Grande Paroisse in France, Fertiberia in Spain and others in Bulgaria.
In America strategic closing of ammonia plants is more to be expected, but even so 50% of the plants in the Midwest are down.
UK manufacturers are still making ammonium nitrate fertilisers however, but are doing so by buying ammonia, rather than making it themselves from gas.
At $360/t and falling, the price of ammonia equates to 56p/therm for gas.
The daily UK gas price continues to fluctuate wildly, recently between 60p and 90p/therm. Forecasts of more cold weather will send prices needlessly through the roof yet again.
The plants will start up again, Kemira has just expended in excess of £2m in improving efficiency at its ammonia plant, and Terra at Severnside is undergoing statutory inspection and maintenance.
But start-up costs are enormous and these will not take place until gas prices normalise.
Current high prices would normally have producers rejoicing in profit.
As it is, replacement costs for the stock leaving the factories just continues to rise and must be met to avoid losses.
This situation has led to a most unusual gap between complex compound prices and those for blended compounds. This gap is approaching £20/t in some cases.
Blenders, having purchased raw materials at a time of lower cost have taken the view that market share is more important than covering replacement costs.
Adjustment in compound pricing is inevitable, either Blends will rise or complexes fall in the short term but the steady upward underling forces are inexorable.
Meanwhile the order book remains largely empty but business is still anticipated this spring: industry sources predict as much as 950,000t of compound and 600,000t of nitrogen.
There is anticipation amongst importers, but no interest and hence no action. Urea prices have dropped back a little, say £185/t on farm for granular, with Lithuanian nitrogen edging up at £155-160/t.
The situation amongst traders in both Northern and Southern Ireland looks grim.
The market remains almost exclusively “spot” purchased at the time of usage with farmers currently not really giving fertiliser a thought.
The size of the market is hard to read, but the industry reckons it down about 10%. This means a drop of 45% in business from the mid 1990s.
The purchase window is very small and precious little fertiliser has been added to stocks, which are lower than last year.
Merchants are unwilling to commit, not knowing what requirements will be following phosphate legislation.
Farmers, when they buy, will be very shocked at prices.
CURRENT PRICES (£/t)
Domestic N (34.5%N) SP5
|Copper, zinc, selenium,|
cobalt Iodine and sodium
Straight and compound
Republic of Ireland†
†Note in the Republic of Ireland nutrients are expressed as elements not oxides. Analyses will not be directly comparable with those used in the UK.
*Known as 24.2½.10 blend in the Republic of Ireland
**Known as 27.2½.5 in ROI
Note All illustrated prices are based upon 24 tonne loads for immediate payment. Prices for smaller loads and those with credit terms will vary considerably.