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<blockquote data-quote="Wheatyflake" data-source="post: 7779699" data-attributes="member: 2796"><p>London, 6 October (Argus) — European natural gas prices have increased by 60pc since 4 September, with pricing now over $50/mn Btu, driving fertilizer production costs higher.</p><p></p><p>A tonne of ammonia cost around $975/t to produce in Europe at the start of the week — if the natural gas feedstock was priced spot using the TTF marker. That same tonne would cost over $1,500/t to produce today. CAN and AN production costs rose similarly.</p><p></p><p>To produce and granulate CAN today costs more than €200/t more than it did at the start of the week — <em>Argus</em> estimates around €660/t ex-works for granular CAN 27, including around 4mn Btu of granulation costs. CAN prices in Germany were around €468/t cif inland earlier this week.</p><p></p><p>The cost to produce AN 33.5 rose to €590/t ex-works today from around €375/t ex-works at the start of the week. Prices in France are well below the cost of production for any European producer. These costs are estimated using the production of ammonia on site. Costs would be lower for factories than can import ammonia.</p><p></p><p>Output has already been severely curtailed at most EU nitrate factories because of challenging economics — despite attempts to raise CAN and AN prices to keep pace with the natural gas price — but the sharp rise in gas prices over the last 24 hours places further strain on the system.</p><p></p><p>Crop economics at current grain and nitrogen prices suggest there will be demand destruction in the spring campaign. Further increases to nitrogen prices are necessary for supply to be maintained but will exacerbate this situation.</p></blockquote><p></p>
[QUOTE="Wheatyflake, post: 7779699, member: 2796"] London, 6 October (Argus) — European natural gas prices have increased by 60pc since 4 September, with pricing now over $50/mn Btu, driving fertilizer production costs higher. A tonne of ammonia cost around $975/t to produce in Europe at the start of the week — if the natural gas feedstock was priced spot using the TTF marker. That same tonne would cost over $1,500/t to produce today. CAN and AN production costs rose similarly. To produce and granulate CAN today costs more than €200/t more than it did at the start of the week — [I]Argus[/I] estimates around €660/t ex-works for granular CAN 27, including around 4mn Btu of granulation costs. CAN prices in Germany were around €468/t cif inland earlier this week. The cost to produce AN 33.5 rose to €590/t ex-works today from around €375/t ex-works at the start of the week. Prices in France are well below the cost of production for any European producer. These costs are estimated using the production of ammonia on site. Costs would be lower for factories than can import ammonia. Output has already been severely curtailed at most EU nitrate factories because of challenging economics — despite attempts to raise CAN and AN prices to keep pace with the natural gas price — but the sharp rise in gas prices over the last 24 hours places further strain on the system. Crop economics at current grain and nitrogen prices suggest there will be demand destruction in the spring campaign. Further increases to nitrogen prices are necessary for supply to be maintained but will exacerbate this situation. [/QUOTE]
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