ICE plans to launch its first ammonia futures contract

In an expansion of ICE’s alternative fuels complex, plans are underway to launch an ammonia futures contract on January 16, 2023, subject to regulatory approval.

Created for market participants who want to manage their exposure to ammonia price risk, the cash settled futures contract will be based on Argus Media’s daily price assessment for delivered ammonia cargos into northwest Europe.

"We’re excited about the potential that the ammonia contract has. Given the multiple use applications for ammonia including, increasingly, as a viable alternative fuel source, this contract fits well into our global energy product offering. We look forward to working with our customers to develop the market further,” said Jeff Barbuto, Global Head of Oil Markets at ICE.

Today, an estimated 70% of the supply of global ammonia is used in agriculture as a fertilizer, particularly in Europe. Other uses include in chemical production, cold storage and pharmaceutical manufacturing.

In addition, one of the reasons ammonia has become more interesting to the market is due to its possible development as an alternative energy carrier. Ammonia’s use in agriculture means there is existing global infrastructure in place to produce, store and transport the gas, and discussion continues around its use as a large-scale energy and transport sector solution.

“The contract is based on an established ammonia assessment and we believe this futures contract also has the potential to be used as a barometer against which other ammonia contracts can be created, providing further price discovery and transparency as new technologies and markets evolve,” continued Jeff Barbuto.

Ammonia is being suggested as an additional source for marine fuel, as a means to transport hydrogen, and as an energy storage solution. The gas could also play a significant role in a green-energy future with “clean ammonia” showing promise as a carbon-free alterative. Blue ammonia is produced from fossil sources with carbon capture and storage, while green ammonia is produced from renewably-sourced hydrogen in a process called electrolysis.