Yara to curb fertiliser output further as soaring gas prices bite (updated)
UPDATE 4-Yara to curb fertiliser output further as soaring gas prices bite Recasts paragraph 1, adds context in paragraphs 4 and 5, updates share move in paragraph 9.
By Tristan Veyet and Alexander Gudbrandsen
Oct 22 (Reuters) - Norway's Yara YAR.OL said on Thursday it would curb its fertiliser output further in the fourth quarter, as soaring natural gas prices continue to pressure European fertiliser producers.
Natural gas is both a key feedstock used to make fertiliser and a major energy source in production, meaning price swings can have a significant impact on manufacturers' costs and the prices paid by farmers.
"Currently, curtailments are at a higher level than in the third quarter, and this is because gas price increases have escalated into the fourth quarter," CEO Svein Tore Holsether told Reuters.
The company cut production by 150,000 metric tons of ammonia and 115,000 tons of finished products in the third quarter, mainly at its Ferrara plant in Italy. Year-to-date, its ammonia production is down 11%.
Higher gas prices are raising costs across the fertiliser industry, prompting producers to cut output and rely more heavily on imported ammonia at a time when energy markets remain volatile. Holsether said that, should high prices persist in Europe, Yara could source ammonia from other parts of the world.
About a third of the world's fertiliser flows usually pass through the Strait of Hormuz and have been largely disrupted since the war started. Global food inflation is poised to accelerate further and persist well into 2027 on shipping disruptions and higher fertiliser costs, according to data from the UN Food and Agriculture Organization.
GAS COSTS WEIGH ON RESULTS, NEAR-TERM OUTLOOK
Yara said it expected natural gas costs to be $450 million higher in the fourth quarter of 2026 and $445 million higher in the first quarter of 2027 than in the same periods a year earlier.
It reported adjusted earnings before interest, taxes, depreciation and amortization of $675 million for the third quarter, around 10% less than analysts polled by the company were expecting.
On top of gas prices, deferred fertiliser demand weighed on margins and deliveries in the quarter, it said.
Yara shares were down 1.4% at 1030 GMT.
(Reporting by Tristan Veyet and Alexander Klyve Gudbrandsen in Gdansk, editing by Milla Nissi-Prussak and Matt Scuffham)