March 9, 2022

Seaborne Ammonia Shipments Poised for a 15% Cut

The fallout from the war in Ukraine is causing supply tightness across a number of commodities. Ammonia might be the most impacted of all. Following the closure of the Togliatti – Odessa pipeline, Russian ammonia flows out of the Yuzhny terminal have ceased, representing a 15% cut to seaborne exports. Russian ammonia continues to flow via Estonia, at least for now. Morocco, Turkey, and India will be forced to scramble the most for alternative sources of supply.

Global grains markets are supply constrained – a cutin ammonia shipments is set to add further upward price pressure over the coming months

Fears of shortages in wheat and corn markets are just one part of a plethora of supply problems that exist within the agricultural space at present. Wheat and corn prices are also spiking on the likelihood of higher fertilizer costs. Ukraine and Estonia are major exporters of Russian-produced ammonia, a key input for fertilizers. In 2021, ammonia shipments leaving Ukraine were the second highest of any country, finishing at 2,491 kt, falling only behind that of Trinidad and Tobago, which shipped some 4,295 kt on the year. Estonian loadings accounted for an additional 965 kt through 2021. In total, Ukrainian/Estonian volume accounted for roughly 20% of total global seaborne shipments.

Monthly Ukrainian seaborne ammonia exports (kt) alongside % of total global loadings - Source: Kpler

In Ukraine, Russia ships ammonia production via the Togliatti – Odessa pipeline. According to Live Universal Awareness Map, an organization that provides real time conflict tracking, the Port of Odessa remains under Ukrainian control, albeit a Russian patrol ship was holding just offshore. There were also reports of shell craters several miles upstream. Amid all of this, shipowners are understandably less than willing to lift volume out of the port. Even if they were, it is a moot point given the closure of the Togliatti – Odessa pipeline. The operator suspended shipments on 28-February citing obvious safety concerns.

Given the issues around Odessa, it is no surprise that seaborne ammonia exports have ceased completely. The last shipment of ammonia from Ukraine took place out of the Yuzhny Terminal (24 kt) on 22 February via the Gas Grouper. The Grouper underwent partial discharges into Eti Bakir, on the northern Turkish coast and Aliaga, in western Turkey.

Volumes out of Estonia do not yet appear to be facing a slowdown. The Yara Nauma is currently loading 13.8 kt out of the Sillamae terminal. The Yara has not yet declared a destination for discharge. For now, it is unclear whether loadings of ammonia out of Estonia will continue as normal. The loss of tonnage out of Ukraine is already causing deep supply constraints. Removing an additional 900+ ktpa would only further exacerbate current market shortages. Nonetheless, western countries might very well decide to self-sanction, thus cutting further purchases out of Estonia.

The suspension of ammonia volumes leaving Ukrainere presents a 15% cut to global seaborne shipments; Morocco, India, and Turkey will be forced to scramble the most for alternative sources of supply

The loss of Ukrainian ammonia exports represents a 15% cut to global shipments. Morocco is by and far the most reliant purchaser. The country offloaded some 812 kt in 2021, accounting for 33% of all Ukrainian volume. Turkey (642 kt, 26% of total), and India (357 kt, 14% of total) were second and third largest purchasers, respectively. India is in a particularly tough spot – the country imports more seaborne ammonia than any other country one arth. In 2021, arrivals into the state finished at 2,386 kt. This is likely to pull more ME volumes, namely from Iran, Saudi, and Qatar towards India.

Full year 2021 Ukrainian ammonia shipments by destination country (kt) - Source: Kpler

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