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Supply Chain

Fertiliser Maker Yara Warns About Shortages Due To High Gas Prices

Norway's Yara, one of the world's biggest fertiliser producers, warned there could be shortages of nitrogen-based fertilisers due to high gas prices as it reported a higher than expected second-quarter profit.

The Oslo-listed company said fertiliser markets could see shortages after Russia's invasion of Ukraine pushed food prices higher, with both countries being majors exporters of grains.

Price Spikes

"There is a clear risk of nitrogen shortages and further price spikes if the gas situation in Europe deteriorates further", Yara CEO Svein Tore Holsether said in a statement.

Fertilisers require large amounts of energy to be produced. Manufacturers such as Yara use gas in the process.

Yara expects to pay $1.1 billion (€1.08 billion) more for natural gas in the third quarter than a year earlier and $920 million (€903 million) more in the fourth quarter.

Russia is also one of the world's largest exporters of fertiliser as well as of natural gas, a feedstock in ammonia production.

Dwindling gas deliveries to Europe from Russia has led to soaring gas prices in the region, leading some fertiliser producers to curtail production.

Read More: Fertiliser Maker Yara Says World Faces Extreme Food Supply Shock

Output Reduction

Yara said on Tuesday it had so far curtailed output amounting to an annual capacity of 1.3 million tonnes of ammonia and 1.7 million tonnes of finished fertiliser.

April-June earnings before interest, tax, depreciation and amortisation (EBITDA), excluding one-off items, rose to $1.48 billion (€1.45 billion) from $775 million (€761.2 million) a year ago, while analysts in a company-provided poll had expected profit of $1.39 billion (€1.36 billion).

News by Reuters, edited by ESM – your source for the latest supply chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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