Oil and Gas Price Volatility Raises Chemical Production Costs

The disruption in global energy markets is increasing pressure on fertilizer and chemical production costs.

Higher oil and gas prices affect not only fuel bills but also feedstocks, electricity, packaging and transportation.

The latest quarterly results from major oil producers show the scale of the price increase created by the Iran conflict.

Natural gas remains critical for nitrogen fertilizers

Natural gas is both an energy source and a feedstock for ammonia production.

Changes in gas prices directly influence:

- ammonia production costs
- urea margins
- nitrate fertilizer economics
- plant operating rates
- electricity costs
- working-capital requirements

European producers are particularly exposed when domestic gas prices exceed the cost basis of imported fertilizer.

Oil prices affect packaging and logistics

Petroleum-linked costs influence:

- plastic bags and liners
- resins and coatings
- container transport
- inland haulage
- ocean freight
- terminal handling

A fertilizer price can therefore rise even when the underlying raw material remains available.

Buyers need destination-specific offers

The final delivered cost depends on:

- product specification
- packing format
- shipment volume
- loading point
- destination
- freight and insurance
- shipment period

A universal CIF price is not reliable during periods of severe energy and logistics volatility.

EUROCHEM TRADING calculates each offer for the specific transaction and does not reserve product solely on the basis of an indicative quotation.