Norway’s Yara, one of the world’s largest fertilizer makers, is curtailing its ammonia and urea output in Italy and France due to the surge in natural gas prices, it said on Wednesday, in another sign of rising costs for food production.
The price of natural gas, which is used in the fertilizer manufacturing process, hit record highs in recent days following the Russian invasion of Ukraine.
Yara’s (YARIY) plants in Ferrara, Italy and in Le Havre, France, have a combined annual capacity of 1 million tonnes of ammonia and 0.9 million tonnes of urea fertilizer.
“Including optimization and maintenance at other production facilities, Yara’s European ammonia and urea production is expected to be operating at approximately 45% of capacity by the end of this week,” the company said in a statement.
Yara is the world’s second largest producer of ammonia with a capacity in Europe of 4.9 million tonnes per year, which in turn is used in the manufacture of urea fertilizers.
Europe can still import fertilizers from other regions of the world, where gas prices are lower, but any output cuts are likely to have a negative impact on global supply, analysts have said.
“Yara will continue to monitor the situation and to the extent possible use its global production system to keep supplying customers and secure continuity in food supply chains, but curtailing production where necessary due to challenging market conditions,” the company said.
Yara in September last year announced ammonia curtailments in Europe as gas prices rose but later said production had been mostly restored.
European and British wholesale gas prices hit unprecedented levels on Monday on escalating fears that Russian energy exports could face sanctions after Russia’s invasion of Ukraine.