Green Shoots & Ammonia Boots: Europe’s Quirky (And Costly) Hydrogen Adventure!

Companies Mentioned: Fertiglobe, H2Global, Nutrien, CF Industries, LSB Industries, Yara International, Dow, LyondellBasell, Nova Chemicals, Chevron Phillips Chemical, Nayara Energy, Reliance Industries, Chevron, Hess, Freeport LNG, OCI, ADNOC, Scatec, Accelera, Cummins, Issaquena Green Power, VW, Unilever, Lufthansa
Commodities Mentioned: Ammonia, Natural Gas, Ethylene, Propylene, Polyethylene, Crude Oil, Hydrogen, Renewable Power

Key Findings

General Thoughts: We discuss efforts to subsidize green ammonia supplies from relatively low-cost areas to high-cost regions, highlighting the Fertiglobe winning the H2Global pilot auction to supply green ammonia to Germany.
Supply Chain/Commodities: We highlight global ammonia spot price developments, compare US and Europe gray ammonia production costs, and highlight US spot ethylene and propylene strength WoW after Hurricane Beryl.
Energy/Upstream: Global natural gas prices declined this week relative to crude oil prices, a positive for US ethylene producers. We also discuss India’s efforts to source long-term discounted crude oil supplies from Russia.
Sustainability/Energy Transition: We discuss H2Global efforts to spur green ammonia supplies into Europe, the risk of near-term subsidies relative to long-term goals, and still high production cost and demand challenges.
Downstream/Other Chemicals: We highlight the weakness in US durable goods prices as shown by the latest CPI, led lower partly by weakening used car values, and note credit sourcing troubles facing European manufacturers.

Exhibit 1: Fertiglobe wins H2Global pilot auction for green ammonia supply from Egypt to Germany at a significant premium to grey W. Europe ammonia prices – a subsidized move from Germany to spur green ammonia supply. We flag this development relative to global estimated cost ranges for gray, blue, and green ammonia production.