Green Ammonia: A twist in the tale

13/07/22

The last 24 months have seen numerous reports about the potential for green ammonia going forward. With some predicting the seaborne ammonia market to grow from 16.5 million tons (mmt) to 200 mmt per annum by 2050, and with much of that growth predicted to be green ammonia, it’s easy to see why the sector is attracting a lot of interest across the energy and shipping worlds.

Yet what these reports do not take into account (and indeed could not have done) is the impact of Russia’s invasion of Ukraine in February 2022 on the ammonia market.

Russia's recent invasion of Ukraine could permanently change the shape of the ammonia market going forward.

In this article, we examine the impact of the ongoing conflict on ammonia markets – both in the short and longer-term.

A twist in the tale

Currently, around 4.5 mmt of mainly Russian ammonia is exported through the Baltic states and the Ukranian port of Yuhzhnyy on the Black Sea. The continuing hostilities mean that exports from Yuzhnyy have ceased completely and even if they can resume, political pressures could alter demand for Russian ammonia for many years. Additionally, some bridges and railway infrastructure in Ukraine have already been destroyed and it’s estimated they could take around two years to repair from the time that hostilities end. We have already witnessed significant effects on demand and price, but the full impact remains to be seen.

A reset in world trade?

The conflict in Ukraine and the likely dent in supply from Russia could create shifts in traditional trade patterns. For example:

Production plants

Increased ammonia demand could see production plants which were previously mothballed or scaled down when deemed to be uneconomic, to be restarted.

Existing production scaled up

While ammonia’s role in green initiatives is undoubtedly important, the role it plays in food production is paramount. As such, we can expect to see production scaled up, particularly outside of Russia, causing changes to the trade patterns that we see today.

New green projects

The combination of increased ammonia prices and growing awareness of the strategic importance of ammonia supply and export locations could stimulate new green projects which previously struggled to find support.

Clarksons Gases and Green Ammonia Team

We are the leading provider of shipping-related services to the ammonia industry - and have been for over four decades. More recently, developments in green ammonia and CO2 carriage have become focal points for the Clarksons Gases team.

We deliver integrated solutions with our unique blend of experience and knowledge. Backed by strong analytical support, our Chartering and Asset team is well positioned to assist with developing your ammonia strategy and future-proofing your shipping requirements.

Clarksons Gases welcome new players and the growing efforts being undertaken to decarbonise the industry while remaining fully committed to our traditional ammonia clients. We are already handling several project enquiries from a variety of existing and prospective clients. If you require any help, please contact the team.

Contact the green ammonia team.

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