Yara is reducing ammonia production in many plants due to high liquefied natural gas prices in Europe.
The company writes in a stock exchange announcement.
High prices affect margins and Yara is monitoring the situation.
By next week, the company will have reduced 40% of its production capacity in Europe, according to the announcement.
This means that the production capacity of about two million tonnes of ammonia per year will be reduced, from Yara’s total production capacity of 4.9 million tonnes per year.
Shares of Yara fell about 3% at the beginning of Friday.
These ammonia plants have limited production, according to Yara:
- Brunsbüttel in Germany and Herøya in Porsgrunn, which had to be maintained anyway
- Sluiskil in the Netherlands
- Ferrara in Italy
- Holes in the UK
- Le Havre in France
Gas prices in Europe have risen from $ 2 per MMBtu to about $ 20 per MMBtu in just over a year, in part due to the cold winter last year, low gas reserves, limited exports from Russia and the war. between Asia and Europe for liquefied natural gas (LNG). In addition, there was little wind, so that wind energy could not alleviate the gas power.
Yara announced in the second quarter that the company is expected to pay about NOK 6 billion for its gas in the third and fourth quarters together than in the same period last year. Since then, gas prices have continued to rise.
This awaits industry leaders from the new government
– Higher than one expected
E24 raised the price of gas with Yara boss Svein Tore Holsether at the Pareto conference this week and asked if the price was higher than expected.
– I think it is higher than one expected. We only need 14-15 months back, so the price of gas was two dollars per MMBtu in Europe, and now it is around $ 20. There are big changes, Holstetter told E24 on Wednesday.
For Yara as a whole, however, the impact of high gas prices is offset by higher fertilizer prices, which boosts the company’s results.
“Everything is connected, and the prices of raw materials and food have risen, so the prices of fertilizers have also risen from the level of 14-15 months ago,” Yara’s boss said on Wednesday.
Limited effect on the fertilizer
Ammonia is used in the production of fertilizers.
Yara informs E24 that the impact on fertilizer production is limited so far. Yara has the opportunity to obtain ammonia from its own facilities outside Europe and, if necessary, will also be able to purchase ammonia from third parties.
US fertilizer maker CF Industries announced this week that production had stopped at two British plants due to the high price of natural gas.
Read the stock market announcement here