VINACHEM

Canadian ammonia exports are exempted from the prohibitively high levy imposed on Canadian exports to the US, thanks to the US-Mexico-Canada trade agreement.

However, the trade tensions would inevitably motivate Canada to be less reliant on its closest neighbour market and accelerate diversification of its ammonia exports to Asia from the Prince Rupert Port in western Canada.

Stronger push for Canada to diversify ammonia exports despite US tariff exemption
Prince Rupert Port – an emerging low carbon ammonia export and bunkering hub
US Gulf Coast low carbon ammonia projects to face strong competition

Prince Rupert Port has the shortest shipping distances between North America and Asia hence its direct shipping route to Asia stands to undermine the competitiveness of low carbon ammonia exports from the US Gulf Coast.

Besides comparatively longer shipping distances, shipments from the US Gulf Coast to Asia have also been faced with seasonal congestions at the Panama Canal.

Key industry stakeholders in Japan and South Korea have been in talks with US companies to jointly produce low carbon ammonia in the US Gulf Coast States of Texas and Louisiana for export to Asia.

Among the announced US projects, the joint venture between Japan’s largest energy company JERA Company (JERA), global investment and trading company Mitsui & Company and US fertilizer producer CF Industries have progressed to Final Investment Decision.

The first ammonia exports from Prince Rupert Port to Asia are likely to be low carbon trades spearheaded by two of Japan’s largest trading houses Itochu and Marubeni.

Low carbon ammonia exports from Prince Rupert Port would position Canada as a key stakeholder in an emerging low carbon commodity ecosystem comprising major bunkering hubs such as Amsterdam, Algeciras, Singapore and Port Zayed, key exporters including the UAE, Saudi Arabia, Qatar, Oman, Egypt, India, Malaysia, Thailand, Indonesia, Australia and the US, and importers including countries in Europe, Japan and South Korea.

Low carbon ammonia supplies via the Prince Rupert Port will also facilitate development of a low carbon marine fuel bunkering service that could potentially be in direct competition with the proposed low carbon bunkering services at the US ports of Los Angeles and Long Beach.

Demand for low carbon ammonia bunker fuels on the US west coast is expected to be driven by car-carrying vessels calling at Port Bernicia and container vessels at Port Oakland.

The Canadian government has been inviting foreign investments to develop a new liquid chemicals export route from the Prince Rupert Port as the port has been seeing declining trades volumes in recent years due to shifting global trade flows and competition with other North American ports.

AltaGas and Royal Vopak are jointly building an export facility on the Ridley Island, British Columbia, that includes a large-scale liquefied petroleum gas (LPG) and bulk liquids terminal with rail, logistics and marine infrastructure.

As vessels can be configured to alternate between LPG and ammonia cargoes, ammonia can be one of the outbound trades to benefit from the export facility at Ridley Island.

While diversifying overseas markets to pre-empt risks, including tariff or non-tariff trade barriers, would make sense for any exporters, it is particularly crucial for ammonia producers as stringent safety standards for the transportation and handling of ammonia means alternative export channels are not easily set up.

Canada exported about 1.08 million tonnes of ammonia to the US last year, around 19% of its total annual ammonia capacity of about 5.62m tonnes, and almost all Canadian ammonia exports have been for the US market at least since 2020, according to the ICIS Supply and Demand database.  – Source: ICIS