New pricing service announced for low-carbon ammonia

Argus Media

Argus Media is the latest organisation to launch a pricing service for low-carbon ammonia. Based on ammonia production using “renewable fuels” or fossil-based feedstock combined with CCS, Argus is now forecasting 312 different production costs at key global locations. As is standard practice, the price service assumes ammonia purity >99.5%, with the product in liquid form at -33°C. Further details on the service can be found here, and a full methodology here.

Providing transparency to the evolution of decarbonised ammonia costs is critical for our industrial customers, as they evaluate their options for a transition to net zero. Our new cost indexes offer a vital independent reference for companies structuring offtake agreements. At this stage of the market’s evolution, these are key for progressing projects to a final investment decision and bringing decarbonised production to market.

Argus Media Chairman and CEO Adrian Binks in his organisation’s official press release, 23 Feb 2023

It is important to note that – unlike fossil-based ammonia – the pricing for low-carbon ammonia is based on a much smaller dataset. Argus reports using a dataset covering “more than 12 months”, but it is widely acknowledged that the cost of key inputs to low-carbon ammonia – renewable electricity, renewable generating assets, electrolysers, CCS infrastructure etc. – will continue to change dramatically in the coming years. More data will help these pricing services more accurately reflect low-carbon ammonia prices.

CRU, S&P Global

Last year, both CRU and S&P Global launched their own low-carbon ammonia pricing services. CRU’s method is based on ammonia production in northwest Europe, and combines the weekly European carbon price with CRU’s own emissions analysis tool to calculate the value of mitigated emissions. Further key production locations will be added (such as east Asia). Learn more via an explanatory webinar CRU hosted last December.

S&P Global Commodity Insights’ service is based on CCS ammonia, and the rise of mega-scale production hubs in east Asia, the Middle East, northwest Europe, and US Gulf Coast. S&P’s pricing service:

…will reflect delivered cargo prices on a cost and freight (CFR) basis into Far East Asia and Northwest Europe, and cargo prices on a free on board (FOB) basis loaded in the Middle East, and will reflect established production technology, trade routes and uses. These prices will be published, in US dollars per metric ton. For consideration in the assessment process, cargoes must have a minimum purity of 99.5% of anhydrous ammonia by weight, a maximum water content of 0.5% by weight, and a maximum oil content of 10 ppm by weight.

Service details from S&P’s official press release, 22 Apr 2022

And will build on existing, fossil-based price assessments that take into account “conventional” cargo sizes, shipping times and trade routes.