Ammonia prices are about to rise (US) By Tom Stundza Purchasing December 13, 2006
Chemical buyers can expect a higher ammonia prices in early 2007 due to the growing demand for corn to make ethanol. "Expect ammonia demand to increase up to 10% next year due to increased fertilizer usage resulting from higher demand for corn due to increased ethanol demand as a blending component in gasoline,” notes analyst Robert Morris of Banc of America Securities.
And that will ramp up ammonia prices in 2007—possibly by as much as 20% from the $2.96/lb average of the past two years to $3.53. Reason: Ethanol is being used more extensively as a gasoline octane additive. Corn is the key ingredient in making ethanol, but it one of the most fertilizer-intensive crops in the country.
Atop that, ammonia supply has tightened in recent years as several North American plants have been idled as a result of rising natural gas prices since the early 2000s. Natural gas is the fuel of choice in ammonia manufacture. Morris sees further ammonia pricing problems as 2007 progresses from anticipated decreased imports. Although imports of the product rose about 65% between 1999 and 2004, he forecasts that imports next year are expected to be flat.
