Norway’s Yara becomes the latest fertilizer producer to reduce production

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Yara International ASA update

With natural gas prices hitting record highs, Norway’s Yara International has become the latest fertilizer producer to cut ammonia production, as the energy squeeze threatens food supplies.

The partially state-owned group said on Friday that it will cut its synthetic ammonia production capacity by 40% next week to protect its profit margins after soaring natural gas prices have weakened profitability.

Yara is one of the world’s largest fertilizer producers. Its competitor CF Industries closed two large British fertilizer plants a day ago, which triggered warnings from industry data that there is an imminent shortage of ammonium nitrate, which may affect food supply.

Ammonia is used to make ammonium nitrate, which is one of the most widely used fertilizers. It is derived from natural gas and nitrogen. The sharp rise in natural gas prices has forced producers to work hard to pass the cost to customers as quickly as possible.

Of Yara’s 4.9 million tons of ammonia production in Europe, it plans to cut production by approximately 2 million tons in the Netherlands, Italy, the United Kingdom and France. Its plants in Brunsbüttel, Germany and Porsgrunn, Norway are scheduled for maintenance, further reducing production capacity.

The company said it will purchase some of the ammonia it needs from outside Europe or from third parties. “The current impact on the finished product is very small,” it added.

The company said that the length of the cut will depend on the price of natural gas and nitrogen, the two key inputs of ammonia.

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