Tougher Than The Rest: Ammonia Brushes Off Cost Curve Flattening Pressuring Global Chemical Markets

Key Findings

General Thoughts: Ammonia prices have surged to 2025 highs, while European and Asian natural gas prices have fallen to YTD lows relative to US levels, spurring production as 2026 demand is likely to moderate from 2025 levels.
Supply Chain/Commodities: We discuss EU ethylene, methanol, and ammonia production costs falling relative to still-advantaged US costs, suggesting urgency around still-needed restructuring may lessen for some into 2026.
Energy/Upstream: Brent and WTI crude oil prices, as well as European and Asian natural gas prices, have fallen in 4Q25 relative to US natural gas prices, suggesting downward pressure on chemical prices and tighter US margins.
Sustainability/Energy Transition: European carbon prices rise to a 2025 high, while EU natural gas prices fall to a 2025 low relative to USGC levels. We also discuss the likelihood that CCS growth falls short of announced targets.
Downstream/Other Chemicals: We discuss soybean prices remaining above 2.5x corn prices, a level that typically favors increased US soybean plantings. Manufacturing in the US, Europe, and China also contracted in November.