In This Article:
* BASF cut ammonia output in Sept, could do again - sources
* Yara's ammonia output across Europe is 27% below capacity
* SKW, Ineos say monitoring situation closely
By Ludwig Burger
FRANKFURT, July 27 (Reuters) - Germany's BASF, the world's largest chemical company, is considering further cuts to ammonia production due to soaring natural gas prices, two sources familiar with the matter said, with potential ramifications from farming to fizzy drinks.
Germany's biggest ammonia maker SKW Piesteritz and number four Ineos also said they could not rule out production cuts as the country grapples with disruption to Russian gas supplies.
Ammonia plays a key role in the manufacturing of fertiliser, engineering plastics and diesel exhaust fluid. Its production also yields high-purity carbon dioxide (CO2) as a byproduct, which is needed by the meat and fizzy drinks industries.
Unlike many European countries, Germany has no liquefied natural gas (LNG) port terminals to replace Russian pipeline gas. That means companies are under political and commercial pressure to reduce gas intensive activities if gas deliveries are cut further.
BASF cut ammonia output at its headquarters in Ludwigshafen and at its large chemical complex in Antwerp, Belgium, in September. Its output rate is still reduced and could be cut further, although the company will closely examine the knock-on effects, the two sources said.
BASF told Reuters it would continue to fulfil its internal ammonia needs and external customer demand, declining to disclose plant utilisation rates.
Fertiliser giant Yara, which runs Germany's third-largest ammonia production site in the northern town of Brunsbuettel, said its output across Europe was currently 27% below capacity due to the surge in gas prices.
It would not specify the Brunsbuettel rate, but added the site does not deliver any high-purity CO2.
SKW said it was in the process of resuming full production after a scheduled maintenance shutdown but the future capacity utilisation rate was extremely difficult to predict.
Chemical companies are the biggest industrial natural-gas users in Germany and ammonia is the single most gas-intensive product within that industry.
Companies that reduce ammonia production may lose market share to imports from overseas suppliers with access to cheap gas, or in Germany might accept compensation payments under a potential gas rationing programme to encourage manufacturers to quickly scale back production to balance out supply cuts.
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Most ammonia goes into nitrogen fertilisers but other uses include diesel exhaust fluid AdBlue and engineering plastics.