CF Fertilisers UK pauses ammonia production on high gas, carbon prices

CF Fertilisers UK pauses ammonia production on high gas, carbon prices

CF Fertilisers UK, a subsidiary of CF Industries Holdings Inc

, said on Wednesday it would temporarily halt ammonia production at its Billingham Complex due to high natural gas and carbon prices.

The company said that it intended to use the site's capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants, adding that it expects to fulfil its ammonia and nitric acid contracts for delivery in the coming months.

The date of the shutdown has not yet been determined.

"The current cost of natural gas at National Balancing Point (NBP) is more than twice as high as it was one year ago, with the NBP forward strip suggesting that this price will continue to rise in the months ahead," the company said in a statement.

In Britain, the contract for next day gas delivery (TRGBNBPD1) was up by a quarter to 507.5 pence per therm on Wednesday and around 40% higher so far this week.

Other fertiliser plants across Europe such as Group Azoty and PKN Orlen's Anwil in Poland have also limited ammonia and nitrogen production due to the price of gas.

"Nitrogen supply availability will continue to worsen in Europe on elevated gas prices...We do not expect ammonia to price off EU gas. As prices are pulled higher by the EU (and Asia), demand destruction will accelerate," analysts at Scotiabank said in a research note.

Ammonia prices could rally by around 30%, while urea and urea ammonium nitrate (UAN) could rally between 50% and 65%, they added.