Source: CCTV Finance
The continued rise in natural gas prices in Europe has not only increased the cost of living for people, but also made many fertilizer producers feel more stressed. Now a number of companies have announced production cuts, and the price of nitrogen fertilizers with natural gas as an important raw material has also risen. What kind of ripple effect will this trigger?
Dutch TTF natural gas futures prices rose more than 85% in the past month
Although there has been a pullback in overnight trading, the Dutch TTF gas futures, the main indicator of European gas trading, have still risen by more than 85% in the past month, and the price is now 771.43% higher than a year ago, several times higher.
International Energy Agency: Energy-related CARBON DIoxide emissions hit new highs last year
Under the sharp rise in natural gas prices, the use of non-clean energy in many parts of the world has also increased, which also poses a threat to the global emission reduction plan. According to information released by the International Energy Agency on its website on March 8, in 2021, global energy-related carbon dioxide emissions increased by 6% to 36.3 billion tons, which is the highest level since statistics were made, and the new emissions of more than 2 billion tons are also an annual increase in history. The International Energy Agency also pointed out that the strong recovery of the world economy from the epidemic and the heavy dependence on coal power generation in the process are the main reasons.
Natural gas prices rise European fertilizer producers cut production
Rising natural gas prices, which lead to higher carbon emissions, could also push up food prices further, mainly because major fertilizer producers are cutting production again. Natural gas is an important raw material for the production of nitrogen fertilizers, usually accounting for about 80% of the cost. Nitrogen production relies on ammonia, and now Yara, one of Europe's largest natural gas and fertilizer companies and a Norwegian fertilizer producer, has said on Wednesday that it has temporarily cut production at its plants in Italy and France, and by the end of this week, its European plants will produce only 45% of normal capacity.
UK farmers: nitrogen fertilizer prices increased by 200% compared to 1 year ago
Austria's Borealis is also cutting ammonia capacity and is considering shutting down production for "economic reasons"; another Hungarian fertilizer producer, Nitrogenmuvex, has also suspended ammonia production. Now, the British Farmers' Federation (NFU) is asking to investigate the rise in fertilizer prices, and the organization cites data showing that the price of nitrogen fertilizers has risen by 200% year-on-year.
In addition to rising fertilizer prices, the Conflict between Russia and Ukraine also poses a threat to food security in the Black Sea region, and an analysis by the commodity consultancy LMC pointed out that since the outbreak of the conflict, 60% of the export of sunflower oil in the Black Sea region has been delayed.
Food and Agriculture Organization of the United Nations: Rising prices of vegetable oils and dairy products push up global food prices
Now that the region is about to usher in the sunflower and maize planting season, it is expected that yields may also be affected. In addition, the price of palm oil is also expected to hit record highs in the coming months. The latest data released by the Food and Agriculture Organization of the United Nations recently showed that in February this year, the price of a variety of vegetable oils tracked by the organization rose by 8.5% month-on-month, hitting a new high, and the overall food price index, driven by vegetable oils and dairy products, also climbed to a record high in February.