As the Hydrogen Economy Rises, 'Ammonia Stocks' Also Take Off

Long-Distance Transport Suitability Draws Attention... Samsung Engi and Lotte Fine Chemical Soar

[Asia Economy Reporter Gong Byung-sun] Amid growing attention to the hydrogen economy, ammonia-related stocks responsible for hydrogen transportation have started to benefit. Ammonia's advantages are highlighted by its high storage efficiency and suitability for long-distance transportation.

According to the Korea Exchange on the 16th, Samsung Engineering has risen nearly 18% since the beginning of this week. It surged more than 11% just the day before. Lotte Fine Chemical has risen for 10 consecutive trading days as of the morning of the same day.

Recently, market interest in the hydrogen economy has increased with the launch of a hydrogen business consortium jointly operated by Hyundai Motor, SK, and POSCO. Amid this, the market has begun to look for substances suitable for long-distance transportation within the hydrogen economy value chain. Hydrogen is inefficient to transport due to its large volume compared to other elements. Currently, the most common methods are transporting it as gas or liquefied hydrogen, but intercontinental movement is practically impossible, and storage efficiency is low.

The market has started to focus on ammonia, which has high storage efficiency. Even considering the conversion cost of separating ammonia into hydrogen and nitrogen, it is more suitable for long-distance transportation. In fact, ammonia's storage efficiency is 1.7 times higher than that of liquefied hydrogen. In maritime transport, the cost-saving effect of ammonia compared to liquefied hydrogen increases gradually: about $0.9 per kg at 1000 km, about $1 at 2000 km, and about $1.2 at 3000 km.

Han Sang-won, a researcher at Daishin Securities, explained, "When transporting distances over 2000 km, ammonia is cheaper than liquefied hydrogen," adding, "There is also the advantage of being able to utilize existing infrastructure."

The two companies that have recently experienced an upward trend hold dominant positions in the ammonia industry. Samsung Engineering has long focused on ammonia production plant facilities as a core product line. In particular, it is actively participating in hydrogen-related businesses, including joining the Green Ammonia Council recently. A Samsung Engineering official said, "In the past, we conducted projects related to ammonia plants, but now we are expanding our business by signing memorandums of understanding (MOUs) with hydrogen companies."

Lotte Fine Chemical already possesses production infrastructure responsible for 70% of domestic ammonia distribution. Ammonia accounted for 41.6% of Lotte Fine Chemical's sales in the second quarter of this year. One researcher explained, "Affiliate Lotte Chemical is also participating in the hydrogen business, and about 2.5 million tons of volume has already been confirmed," adding, "Even conservatively, the sales increase effect will reach 2 trillion won."