High Gas Costs Force Ammonia Production Shutdowns at Agrofert
What happened
Agrofert's ammonia maker, AGF Nitrogen, has shut down some ammonia production units and may shut more due to high gas prices and a slump in demand. The company has been running its nitrogen units at 80% to 85% capacity and has begun importing ammonia. These shutdowns began in September, when gas prices started increasing quickly.
Why it matters
High global prices for natural gas, driven by conflicts in Ukraine and the Middle East, have increased the cost of manufacturing ammonia and nitrogen fertilizers. Coupled with shipping constraints in the Strait of Hormuz, these high costs have pushed fertilizer prices beyond the budgets of many farmers.
Who's involved
- AgrofertThe Czech conglomerate whose ammonia maker is halting production due to high gas costs.
- AmmoniaThe chemical product whose production is being curtailed due to high input costs.
- Andrej BabišThe person who founded and maintains control over the Agrofert holding company.
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- CF IndustriesSpeculative
Reduced supply from a major European producer could drive up global ammonia and fertilizer prices.
- EquinorSpeculative
Rising ammonia prices might increase the operational costs of using ammonia as a marine fuel source.
- Eidesvik OffshoreSpeculative
Higher ammonia costs due to supply constraints could increase operational expenses for offshore energy conversions.
- CVR PartnersSpeculative
Higher ammonia costs due to supply constraints might increase operational expenses for their products.