In this article we take a snapshot of the current green ammonia market, looking at some of the ongoing issues affecting the sector.
Overall demand for ammonia is on the rise. Regardless of production method, ammonia demand continues to grow, primarily for agriculture, but also driven by a growing desire to reduce carbon emissions.
Spiking gas prices
Rising energy costs have created term contract price imbalances, giving some cause for concern. Particularly in Europe we have seen spiking gas prices push ammonia production costs to well above the delivered price. As suppliers take advantage of lower production prices elsewhere, we are noting unusual shifts in trade with cargoes being loaded from well outside of the normal geographical zones and shipped to long-haul destinations.
Uncertainty around supply and trade routes
Recent geopolitical events have prompted governments to re-evaluate the degree to which they rely on certain regions for fertiliser and agricultural goods. While shipping overall does not appear to have suffered so far (ammonia ton-miles are currently a little higher than usual), ongoing uncertainty about supply and trade routes is leading to shorter-term strategies being adopted for shipping.
The Japanese government remains committed to the use of ammonia as an energy solution (to supplement current supply in the short-term with a view to replacing coal-fired power generation in the long-term). In order for Japan to realise these ambitions, production elsewhere will need to ramp up significantly. Realistically, supply may need to start with blue ammonia until greener projects are up and running.
Ammonia is recognised as a potential carrier of hydrogen (which is exceptionally difficult to contain and ship as a liquid in its pure form). As global demand for hydrogen as a clean fuel increases, demand for ammonia could be indirectly stimulated.
Ammonia appears to be on the verge of significant change in terms of trade and usage. How this plays out will depend on both production and the speed with which investment can be secured to (i) support new projects and (ii) boost production from existing plants.
While high commodity prices may provide incentive for investment in ammonia, high energy prices and global financial instability could have a suppressing effect in the short-term.
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.
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