Chemical profile: Ammonia

27 October 2008 00:00 Source:ICIS Chemical Business

USES

Ammonia's main use is in fertilizers where it is processed into products such as ammonium
nitrate (AN), urea, ammonium phosphates and ammonium sulfate.

Ammonia is also used to produce nylon, acrylonitrile (ACN), isocyanates, hydrazine and
explosives. It is used as a catalyst in phenol-formaldehyde and urea-formaldehyde condensation
to make synthetic resins.

SUPPLY/DEMAND

Slow export demand and surplus supply in Europe reversed in June, when Australian firm CSBP
Chemicals' 740 tonne/day plant in Kwinana, Western Australia, was forced to shut after a fire at
its gas supplier Apache. The outage led to increased demand in Europe for shipments to Asia.
Maintenance shutdowns in Algeria, Ukraine, and Russia have also limited supply out
of Yuzhny, Ukraine, since June. Supply should start to ease now as CSBP's plant restarted in
mid-October and turnarounds are due to finish.

Global consultancy Nexant estimates West European production to be 8.9m* tonnes in 2008,
compared to 9.2m* tonnes in 2007, while output in Central and Eastern Europe (CEE) will rise by
300,000* tonnes in 2008 to 21.3m* tonnes/year. West European demand will dip by 100,000
tonnes this year to 10.9m tonnes and will rise by 400,000 tonnes/year to 18.4m tonnes/year in
CEE, according to Nexant.

Fertilizer maker GrowHow UK closed its 265,000 tonne/year plant in Avonmouth, UK, in January
2008 due to high operating costs.

PRICES

Spot prices, which had stayed in the range of $210-280/tonne FOB Yuzhny in 2006 and 2007,
started to climb in December 2007, peaking at $880/tonne FOB in September. Price ideas
dropped in mid-October to well below $800/tonne FOB, but no purchases meant a firm price
range could not be pinpointed in a volatile market.

TECHNOLOGY

Ammonia is produced by reacting nitrogen and hydrogen under high pressure and temperature.
Most process improvements have been made through better catalyst systems, improved
reformer and converter designs and by integrating energy needs and heat recovery. Designs
have been developed to integrate ammonia and methanol production and several plants have
been converted to coproduce methanol. There is a trend toward larger single-train plants that can
produce over 1.4m tonnes/year.

OUTLOOK

Demand growth in Western Europe will remain under 1%/year, says Nexant, while CEE markets
will grow at 2-3%/year. Western Europe's net import need, estimated at 1.9m tonnes* in 2008,
will grow as high gas costs force closures and reductions of expensive capacity. The region will
be mainly supplied from Eastern Europe and North Africa.

Plants are under construction in Egypt and Iran for start-up at the end of 2008. More capacity is
planned in Iran, Qatar, Saudi Arabia, Algeria and Russia for 2011-2012.

* Figures expressed as nitrogen content

WEST EUROPEAN AMMONIA CAPACITY, '000 TONNES/YEAR

Company Location Capacity

Adubos de Portugal Barreiro, Portugal 300
Agrolinz Melamine International Linz, Austria 500
BASF Antwerp, Belgium 650
Ludwigshafen, Germany 875
BP Refining & Petrochemicals Gelsenkirchen, Germany 260
DSM Agro Geleen, Netherlands 970
Fertiberia Palos de la Frontera, Spain 415
Puertollano, Spain 200
GPN Agriculture Grandpuits, France 390
Le Grand Quevilly, France 390
Growhow UK Billingham, UK 530
Ince, UK 400
INEOS Olefins Cologne, Germany 330
Phosphoric Fertilizer Industry Kavalla, Greece 150
Produits et Engrais Chimiques du Rhin Ottmarsheim,France 240
SKW Stickstoffwerke Piesteritz Lutherstadt Wittenberg,Germany 1,090
Yara Brunsbuttel, Germany 700
Ferrara, Italy 500
Hull, UK 270
Le Havre, France 400
Pardies, France 160
Porsgrunn, Norway 500
Sluiskil, Netherlands 1700
Tertre, Belgium 400
SOURCE: ICIS

Profile last published November 8, 2004

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