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Nitrogen+Syngas 382 Mar-Apr 2023

31 March 2023

Market Outlook

Market Outlook

Historical price trends $/tonne

AMMONIA

  • The EU benchmark TTF natural gas price had fallen to $16.89/MMBtu on average for February, down 19% on January’s average and 36% lower than the figure for February 2022. By the end of the month it had fallen to $14.83/MMBtu, its lowest level since the outbreak of war in Ukraine. EU gas storage was assessed as 61% full on 28 February, compared to a five-year seasonal average of 40%, due to strong LNG imports and mild weather over the winter. Over one third of European ammonia capacity has returned to production as gas prices fall.
  • Ammonia demand is expected to pick up for the spring planting season in the northern hemisphere, but remains subdued at present.
  • Market fundamentals suggest that some further price deterioration is possible as buyers continue to stay out of the market on expectations of further price cuts by producers.

UREA

  • A large overhang of ammonia stocks weighed heavily on all nitrogen markets, including urea. Buyers have been thin on the ground, with the US Gulf taking some excess capacity.
  • There are also expectations of more supply from China in the coming months as export restrictions are lifted. Chinese urea exports halved to 2.6 million t/a in 2022 from 5.3 million t/a in 2021 because of export quotas and other restrictions.
  • New plant start-ups added a reported additional 8 million t/a of capacity in 2022, which is also beginning to make itself felt in excess supply.
  • Overall, a correction downward in prices to rebalance the market by forcing some production curtailments seems likely given muted levels of demand and high availability.

METHANOL

  • Falling coal prices in China as temperatures begin to rise have supported better margins for domestic Chinese methanol producers, but returns remain poor and many plants have elected to take early turnarounds. Low olefins prices have kept MTO operating rates low. Relatively high Chinese coal prices continue to set a floor under global methanol prices.
  • The US became a net methanol exporter in 2022 according to recently released figures, with a net outflow of 1.8 million t/a, up from the 2021 figure, which showed imports and exports evenly balanced. Relatively cheap natural gas and Europe’s interruption of supply from Russia allowed US producers to ramp up production for export to Europe. Methanex is looking at Q4 2023 for a start-up of its new Geismar 3 plant
  • Equinor said it would restart its 900,000 t/a Tjelbergodden methanol plant at the start of April following a maintenance shutdown.
  • Methanol prices have been fairly stable, with a pickup in demand likely in Q1 2023 compared to Q4 2022.

Latest in Outlook & Reviews

Running the gamut

This issue of Sulphur magazine contains a preview of CRU’s Sulphur + Sulphuric Acid conference in Woodlands, Texas, which is being held from November 3rd to 5th this year, giving delegates the opportunity to meet and discuss some of the trends which are continuing to change the sulphur and sulphuric acid industries. Some of this is echoed in our editorial coverage this issue; the rise of electric vehicles and the continuing electrification of society is changing demand for metals and impacting upon both sulphur and sulphuric acid markets alike. As CRU’s principal analyst Peter Harrison discusses on pages 36-37, battery demand for nickel is leading to a surge in new nickel leaching capacity in Indonesia which is drawing in greatly increased volumes of sulphur, while rising demand for copper is leading to additional volumes of smelter acid from China, India and Indonesia which are impacting the merchant market for acid, as detailed by CRU’s Viviana Alvorado on pages 38-40. In the United States, new lithium mines will require additional sulphur (see pages 22-23). Rare earths and battery metal recovery will form a major topic on the first day of the Sulphur + Sulphuric Acid conference, with speakers from Lithium Americas, one of the pioneers of the new US lithium industry.