In recent weeks, UK natural gas prices have been rising to levels not seen since March.
Why? Rising natural gas prices have been fuelled by the squeeze in Russian gas supplies and increased EU demand.
Last week, Russian gas supplier Gazprom announced that the flow of gas running through the Nord stream pipeline was to reduce to around 20% of normal capacity (beginning on 27 July). The pipeline that runs Russia to Germany will see a flow of 33 million cubic meters per day, citing the availability of turbines as the reason for reduced flow.
EU countries seeing gas deliveries reduced are struggling to fill storage facilities for winter, which is causing rationing concerns for industry. Demand on the continent is looking to procure replacement for the lack of supplies from the Nord Stream by sourcing alternatives, such as liquefied natural gas (LNG).
Reportedly, the channel linking Britain to the EU has been working at full capacity.
Why is this important?
Demand is not the only factor driving ammonia nitrate (AN) fertiliser prices, so too does supply. Natural gas prices are the main feedstock for fertiliser production. As such, with natural gas prices rising considerably over the past year, this has increased AN fertiliser cost of production too.
Earlier this year, we saw production halted at two of the UK’s main fertiliser production sites. Since then, CF Industries have announced the Ince production site to be permanently shut. Though Billingham is to remain open.
As natural gas prices climb, we have also been seeing rising fertiliser prices.
In recent weeks, we have been seeing climbing natural gas prices again. As such, looking ahead, the outlook for fertiliser prices does not currently look to be easing.
Decisions on fertiliser applications can be difficult. There are many resources to help including a nitrogen fertiliser adjustment calculator, as well as previous analysis considering strategies for nitrogen fertiliser applications.
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