(Bloomberg) -- Europe’s ammonia production capacity shrank even further with more reductions expected as two Polish companies joined a growing list of fertilizer makers cutting output because of rocketing energy costs. 

Grupa Azoty, Poland’s largest chemical company, trimmed ammonia output on record gas prices, while Anwil, a unit of oil company PKN Orlen SA halted production of the nutrient. That means about 38% of Europe’s production capacity for the key fertilizer ingredient is now reduced or completely curtailed, according to Chris Lawson, an analyst at researcher CRU Group.

“This is confirmed reductions only,” Lawson said by email. “The reality is likely higher.”    

More output curbs should be expected in Europe, where the cost of natural gas has soared more than 500% from levels a year ago in an energy crisis fanned by Russia’s war in Ukraine. Producers such as Yara International, Borealis AG and Fertiglobe Plc have all warned of deteriorating conditions in Europe, while others see production shifting overseas.

“In the current situation where the price of gas in Europe is eight to 10 times higher than in the US, European producers are not able to compete on the global market,” said Lukas Pasterski, a spokesman for Fertilizer Europe, a lobby group. “This is the case especially if you can’t import ammonia from outside of Europe.” 

Shrinking ammonia supplies will only intensify if there’s a full shutoff of Russian natural gas, and German authorities have voiced concerns about the need for gas rationing during the coldest months of the year. Some chemical and fertilizer manufacturers are considering cheaper non-European ammonia, with BASF SE saying last week that it’s considering external sources as a “risk mitigation consideration in the event of a major curtailment of natural gas volumes.” 

Europe’s woes are proving an opportunity for fertilizer makers outside of the region. Mosaic Co., a U.S.-based crop nutrients company, says it will continue production to meet the global demand and will continue to tap attractive fertilizer prices. 

“While prices for natural gas and other raw materials we use in fertilizer production have risen, so have fertilizer prices. We continue to produce as much fertilizer as we can to meet global farmer demand,” a Mosaic spokesman said by email. 

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