SunSirs: Middle East Supply Tightens Sharply, Synthetic Ammonia Prices Surge

According to Profercy data, on March 27, the CIF price for the April shipment contract of synthetic ammonia at the Port of Tampa, USA, was settled at $775 (per ton, same below), a sharp increase of $160 compared to the March contract—a rise of over 25%. This benchmark price for the U.S. market has approached the high levels seen since early 2023.

Unlike previous trends in the urea and nitrate markets, synthetic ammonia buyers had not faced significant price pressure due to ample supply in Northeast and Southeast Asia. However, with supply disruptions in the Middle East, the market has begun a frantic scramble for alternative sources, and spot prices east of the Suez Canal are rising rapidly.

The primary driver of this price surge is the sharp tightening of supply in the Middle East. Ongoing conflicts in Iran and surrounding regions have reduced global synthetic ammonia supply by over 315,000 metric tons per month. Meanwhile, some Algerian producers have seen their capacity halved due to reduced feedstock supplies; Yara’s large-scale synthetic ammonia plant in the Pilbara region of Western Australia has been shut down for 4 to 6 weeks, reducing monthly supply by 60,000 to 70,000 metric tons, further exacerbating the supply gap and driving up market prices.

Richard Ewing, Deputy Editor of Profercy’s Synthetic Ammonia section, noted that while facilities in the Americas are currently operating smoothly, two newly built large-scale export-dedicated plants in Texas have not yet reached full capacity and are not expected to achieve stable shipments until early in the second quarter. This new capacity is expected to exert some downward pressure on Western market prices; even so, the CIF price for synthetic ammonia at the Port of Tampa could still surpass the $790 level seen three years ago. However, current prices remain far below the historical high of $1,625 CIF set in April 2022 at the onset of the Russia-Ukraine conflict.

Richard Ewing noted that a key variable for the market going forward is whether European synthetic ammonia producers will cut production due to rising natural gas costs. To date, major European import hubs have not seen a significant rebound in demand.

Since most Western traders are waiting for the Port of Tampa pricing to be finalized before initiating a new round of procurement negotiations, and with no signs of the conflict in the Middle East easing, spot trading in synthetic ammonia is expected to be very active in the near term. Richard Ewing stated that countries highly dependent on Middle Eastern supplies, such as India, may have no choice but to accept purchasing at higher prices.

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