Nitrogen producer competitiveness squeezed by $70 per tonne in new era of energy pricing - Integer
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Nitrogen producer competitiveness squeezed by $70 per tonne in new era of energy pricing

Posted On: 21-11-2016 By: Ali Asaadi

Integer Research has conducted research into the impact of energy on the nitrogen market and the outlook for feedstock costs which shows that the range between the highest and lowest cost producers in the market has been squeezed across all nitrogen products by as much as $70 per tonne in the last year alone.

This new era of energy pricing and its impact across the nitrogen market is analysed in Integer’s new energy focus report (part of Integer’s Nitrogen Cost and Profit Margin Service).

Free Webinar: Nitrogen Market outlook

Integer’s free webinar will also cover the new era of energy pricing and its impact across the nitrogen market. Register below to watch it live (23 Nov 2016), or to watch the recording on demand when it suits you.

>> Register here (register even if you cant attend on the day – we’ll send you a link to the recording to watch it when it suits you)


The analysis of energy market dynamics is essential to understand the economics of the global nitrogen industry. Nitrogen prices are fundamentally linked to the price of energy since most nitrogen producers worldwide utilise natural gas or coal as their feedstock, and the main cost component of nitrogen production is energy.

Market prices for gas and coal increasingly reflect a complex combination of national, regional and/or global supply and demand for gas. Integer’s view is that the development of these factors is what will determine the future competitive position of nitrogen producers on the global cost curve – and this is reflected in Integer’s medium and long term global producer cost curves. For nitrogen producers with market-priced feedstock costs, profitability and competitive position is largely a function of underlying energy market factors.

The global energy market has fundamentally changed in recent years, and further change is on the horizon. Perceived energy scarcity has given way to a new era of energy abundance due to the growth of newly advanced developing economies, particularly China, and technological innovation in the oil and natural gas industry, giving rise to shale gas and increased LNG trade.

Chart for Nitrogen Release

Integer comprehensively scrutinise the nature of gas and coal pricing to nitrogen producers, in our new focus report on the impact of energy on the nitrogen market and the outlook for feedstock costs and product prices. We summarise some of the key findings of this exercise below – for more information about our detailed analysis on the implications for nitrogen production economics, considering the heightened uncertainty in energy and commodity markets more generally, please contact us directly using the contact details below.

Selected key findings:

  • Saudi Arabia’s fixed-gas price increased by US$0.75/MMBtu to US$1.50/MMBtu from 1 January 2016, causing the country to move up the global urea cost curve. Meanwhile, producers in Europe reaped the benefits of continued low hub-based gas prices, and bituminous and anthracite coal prices in China continued to fall albeit at slower rates.
  • Although Ukraine’s gas costs fell to US$7.8/MMBtu on average in H1 2016 as it diversified away from Russian gas towards cheaper European imports, the country moved towards the top of the global cost curve given the relative decrease in gas costs in other regions.
  • In China, natural-gas based urea production moved further up the cost curve due to government restrictions on gas supply which resulted in higher fixed gas prices to nitrogen plants.
  • The global range in ammonia ex-works production costs contracted by US$70 per tonne to US$241 per tonne in the first half of 2016 compared to 2015, as feedstock prices continued to decline globally, particularly in countries where gas prices are market-driven such as the US and Europe. This led to producers with regulated or fixed gas prices, such as in Saudi Arabia and Egypt, becoming comparatively less competitive.
  • European producers have shown the largest fall in ex-works urea production costs compared to 2015, due to sustained low hub-based gas prices, while Saudi Arabia, Iran and Nigeria are among the countries that have experienced year-on-year increases in gas costs due to revised state regulated gas prices.
  • Compared to the annual average gas price in 2015, Russia moved up the global nitrates cost curve in rouble terms however remained cost competitive in US dollar terms due to continued devaluation of the rouble. Producers in West Europe moved further down the cost curve as a result of falling market based gas prices, and improved their profitability even more so due to the sustained price premium in effect in Europe.

Free Nitrogen market outlook webinar

Integer Research is pleased to invite you to a free 40-minute online webinar on 23rd November 2016. Register here – even if you can’t attend – we’ll send all registrants a link to the webinar recording to watch when it suits you.

The webinar will cover:

  • The next phase of nitrogen pricing: what has changed?
  • Developments in China: Integer’s previous forecasts and how they have been validated and proven correct
  • Production costs or the supply-demand balance, which is more important going forward?
  • Medium term outlook: who will suffer and who will prosper?

More information: Integer’s Nitrogen market services

Final CoverNitrogen 10-Year Outlook Service
This ground-breaking new service from Integer Research is the first of its kind to integrate ammonia, urea and nitrates market analysis, delivering the most comprehensive 10-year forecast for the global nitrogen industry.

This unique service provides real insight into the global nitrogen market, leveraging our nitrogen expertise and robust methodology to provide the industry’s leading nitrogen outlook service.

Integer’s Nitrogen 10-Year Outlook Services is crucial for strategy development for major international nitrogen players.


Nitrogen Front CoverNitrogen Cost and Profit Margin Service
Integer’s Nitrogen Cost and Profit Margin Service provides an extensive business-focused analysis of the global nitrogen fertilizer industry.

We apply our unique “top down bottom up” methodology and combine cost curve analysis with supply curve analysis – cost curves alone only tell part of the story, incorporating supply curve analysis allows us to show the true competitive position.

We use the latest industry data, and deliver 10-year scenario-based price forecasts that are based on robust methodology and industry expertise.

For more information or if you have any questions please contact us:


Tel: +44 20 7503 1265

About Integer Research

Integer Research is a specialist provider of research, data, analysis and consultancy services across a range of global industrial markets.