Yara has revealed the extent of its European production curtailments, with more than half (58%) of its ammonia capacity curtailed and almost a quarter (23%) of the Norwegian major’s finished fertilizer capacity offline at present.
As of late April, the group had curtailed an annual capacity of 2.8m. tonnes of ammonia and 3.9m. tonnes of finished products, versus 600,000t and 1.3m. tonnes, respectively, in Q1.
In notes accompanying its latest financial results, the company said it will continue to use its global sourcing and production system to import ammonia to Europe and supply global customers where possible.
Based on forward markets for natural gas on 19 April and assuming stable gas purchase volumes, Yara’s gas cost for the current 13-week reporting period should be $650 million lower than a year earlier, at $595 million versus $1.25 billion.
Yara’s results showed a significant drop in production across all its nitrogen-based products, with ammonia output of 1.38m. tonnes down from 1.72m. tonnes in the year-ago period.
Urea production totalled 830,000t, down 296,000t year-on-year, while its nitrates production came in at 1.19m. tonnes, a 335,000t reduction from the same quarter of 2022.
Total deliveries were also down, with the producer attributing this to customers in both Europe and the Americas delaying their purchasing owing to the weak pricing environment.
Ammonia deliveries at 417,000t in Q1 were down 26,000t from the corresponding period last year. Its fertilizer deliveries were well down at 4.65m. tonnes, a 1.47m. tonne reduction versus Q1 2022.
Notably, the European weighted average gas cost during the quarter was $24.5/MMBtu, down from $30.4/MMBtu during the same quarter last year.
Yara’s first-quarter EBITDA excluding special items was $487 million compared with $1.35 billion a year earlier, mainly reflecting reduced margins and lower deliveries.