A newly formed alliance in Saudi Arabia aims to address the rapidly increasing global demand for ammonia and liquefied petroleum gas (LPG).
Bahri (The National Shipping Company of Saudi Arabia) and Petredec will join forces to build a joint commercial team dedicated to meeting the expanding needs for the country’s shipping solutions.
According to recent reports from ChemAnalyst, global ammonia prices surged in the latter part of 2024 due to geopolitical tensions, supply constraints and rising demand.
Prices jumped by 1.2% in the Middle East during the week ending 8th November, largely attributed to a 3.3% rise in natural gas prices during the same week. This rise is thought to be due to the high power generation demand induced by the Russia-Ukraine war.
Operational disruptions at Saudi Arabia’s leading producer Ma’aden caused the price to surge further. The company has since revised down its forecasted production target by 6%, with the reduction in export availability coupled with strong demand for ammonia-based fertilisers in India placing additional strain on supply.
The European market has also been hit by a steep rise in ammonia prices. The Netherlands bore the brunt of the impact when a major operational disruption occurred at Algeria’s Fertial plant, a critical supplier to the Dutch market.
A key gas platform in Norway was then shut down, leading to higher feedstock natural gas costs, which directly impacted ammonia production and export pricing.
North America saw prices jump by 1% during the review week, driven by prolonged labour strikes in Canada, coupled with adverse weather events such as hurricanes causing delays in ammonia shipments.
These disruptions forced several US production facilities to operate at reduced capacity, further constraining supply.
Industry analysts expect that ammonia prices will ‘continue to exhibit volatility’ through the first quarter of 2025.
The most recent review from ChemAnalyst revealed mixed trends in the first half of January 2025, with Asia and the Middle East being the most impacted regions.
In the current review period, the price of Middle Eastern ammonia showed signs of stabilisation after experiencing a decline the previous week. Initiatives such as the Bahri-Petredec alliance could help stabilise prices further, especially with no current significant disruptions or curtailments.
Set to reach a projected revenue of over $4bn by 2030, Saudi Arabia is among the leading ammonia exporters worldwide. According to Eng. Ahmed Ali Al Subaey, CEO of Bahri, the new alliance will further strengthen the country’s presence in LPG and ammonia markets.
“This initiative reflects our dedication to advancing the Kingdom’s Vision 2030 goals of enhancing economic growth and establishing Saudi Arabia as a global logistics hub,” he said.
