Fertiglobe posted single-digit increases in first quarter own-produced ammonia and urea sales volumes to 236,000t and 1.13m. tonnes, respectively, although lower prices meant adjusted net profit fell sharply to $135 million from $361 million in the year-ago period.
The world’s largest seaborne exporter of urea and ammonia combined attributed the weaker performance to softer European gas prices, weather-related demand delays in some key regions and the deferral of 100,000t in urea shipments to Ethiopia at a weighted average price of $700pt.
Traded third party volumes decreased 40% year-on-year to 165,000t from 276,000t in the corresponding period of 2022.
Looking forward, the Abu Dhabi-headquartered supplier expects feedstock pricing to remain well above historical averages, with 2023–2025 forward European gas prices implying marginal cost support levels for ammonia of around $815t, including CO2, for next winter and 2024.
“[This] should result in closures of European marginal production if pricing remains below cost for a sustained period of time,” noted the strategic partnership between Adnoc and OCI Global.
“The nitrogen outlook remains favourable in the medium to longer term,” it added. “New supply that commissioned in 2022, has been absorbed by the market, and limited major greenfield supply additions are expected in the next four years.
“Agricultural demand is buoyed by attractive farmer economics, incentivising nitrogen fertilizer application to replenish decade-low grain stocks.”
The company also announced the production of on-spec green ammonia at its facilities in Egypt in early 2023, with a final investment decision expected before the end of 2023.
The Red Sea plant may eventually produce approximately 15,000t per year of green hydrogen as feedstock for up to 90,000t a year of green ammonia from Fertiglobe’s existing ammonia plants at Ain Sokhna.
Meanwhile, OCI Global posted a 41% year-on-year slide in Q1 revenues to $1.4 billion, with adjusted EBITDA down 65% on a year-ago basis to $336 million.
The company cited significantly lower selling prices and volumes and realised gas hedging losses of $98 million – partly offset by lower gas prices – and an estimated $77 million impact from unplanned outages at its facilities in Texas.
OCI added its 1.1m. tonne/year blue ammonia project in that US Gulf state is on track to start production in early 2025.