Northwest Europe ammonia-to-hydrogen production costs recover
Northwest Europe ammonia-to-hydrogen price recovered some of its previous losses in early December, with its premium to the low-carbon equivalent widening to a 10-month high.
The ammonia-to-hydrogen price rose by €0.09/kg on a weekly basis to stand at €6.16/kg on 7 December, the highest value in four weeks.
The ammonia-to-hydrogen price reflects the cost of importing fossil-based ammonia to northwest Europe and then decomposing that ammonia into hydrogen. The ammonia price referenced is the ICIS CFR Northwest Europe Duty Unpaid assessment, published every working Thursday.
Baseload electrolysis using Dutch front-month power prices also saw an increase in value on a weekly basis, up €0.23/kg to €6.67/kg in early December, extending its premium to ammonia-to-hydrogen to over €2.50/kg.
Conversely, low-carbon hydrogen produced via steam methane reforming (SMR) with carbon capture and storage (CCS) attached using month-ahead Dutch gas posted a weekly loss, down €0.06/kg to €3.51/kg, a nine-month low and a €2.65/kg discount to ammonia-to-hydrogen.
AMMONIA MARKET
With 2023 heading to a close, activity in the ammonia market was focused on contracted volumes rather than any spot potential, weighing on prices as a result.
In Europe, most spot requirements were heard to have already been covered, and with falls in European natural gas prices, pressure to import more volumes has been weak.
As for supply, Egypt’s Abu Qir scrapped its sales tender and will offer these volumes on the spot market instead.
GAS MARKET
The ICIS Dutch TTF January ’24 contract continued to come under pressure in the first trading days of December with solid supply being met with a lack of expectation of a demand hike in the short-term.
TTF January ’24 fell below the €40/MWh mark during week 49 and began week 50 trading around the €37/MWh mark, with pipeline exports from Norway close to full capacity and a continuation of elevated LNG volume delivery levels.
Moreover, temperature forecasts for the majority of Europe for week 50 and week 51 from MetDesk show temperatures 1-3°C above seasonal norms, with no cold snaps on the horizon.