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Norway’s Yara International has become the latest fertiliser producer to slash ammonia production because of record high natural gas prices, as the energy crunch threatens to hit food supplies.
The partly state-owned group said on Friday that 40 per cent of its ammonia production capacity would be curtailed by next week to protect its margins after surging gas prices eroded profitability.
Yara, one of the world’s largest fertiliser producers, follows rival CF Industries which closed two large UK fertiliser plants a day earlier, sparking warnings from industry figures of a looming shortage of ammonium nitrate that could hit food availability.
Ammonia is used to create ammonium nitrate, one of the most widely used fertilisers. It is derived from natural gas and nitrogen. The sharp rise in gas prices has left producers battling to pass on the costs to customers quickly enough.
Of Yara’s 4.9m tonnes of ammonia production in Europe, it plans to curtail approximately 2m tonnes of production in the Netherlands, Italy, the UK and France. Its plants in Brunsbüttel in Germany and Porsgrunn in Norway were scheduled for maintenance, further reducing production capacity.
The company said it would partly source the ammonia it needs from outside of Europe or third parties. “The impact on finished products is currently minor,” it added.
The length of the curtailments will depend on the price of ammonia’s two key inputs, natural gas and nitrogen, the company said.