The global ammonia market is an integral part of the fertilizer industry. Ammonia is widely used as a raw material in the production of various nitrogen fertilizers such as urea, ammonium nitrate, ammonium sulphate and calcium ammonium nitrate among others. It finds extensive usage in the manufacturing of numerous other chemical products including engineering plastics, textiles, fibers, explosives, synthetic fibers, pharmaceuticals and many other industrial applications. Ammonia has excellent agronomic properties and makes soils more productive by improving their physical and chemical properties. The growth in global population and increasing demand for food have augmented the consumption of fertilizers across the world. This in turn is expected to propel the growth of the ammonia market over the coming years.
The Global ammonia market is estimated to be valued at US$ 82.74 Billion in 2023 and is expected to exhibit a CAGR of 6.5% over the forecast period 2024-2031.
Key Takeaways
Key players operating in the ammonia market are Yara International ASA, BASF SE, CF Industries Holdings, Inc., Nutrien Ltd., Potash Corporation of Saskatchewan Inc., Dangyang Huaqiang Chemical Co., Ltd., Shanxi Jinfeng Coal Chemical Co Ltd., GTS Chemical Holdings plc.,Togliattiazot, OCI Nitrogen B.V., Agrium Inc., Sabic, and Koch Fertilizer, LLC among others. The companies are involved in expanding their production capacities and global footprint to cater to the growing demand. For instance, Yara International ASA is working on increasing its ammonia capacity in Egypt and Europe. BASF SE is focusing on expanding its ammonia production unit in Texas, USA.
The key opportunities in the ammonia market include increasing application in industrial goods manufacturing and use as a clean fuel. With advancements in fuel cell technology, ammonia is being increasingly recognized as a potential zero-carbon fuel. It can be used as marine fuel to power ships. Several countries are investing in research and pilot projects to utilize ammonia as marine fuel.
Technological advancements such as development of new production processes are expected to reduce manufacturing costs and make ammonia more competitive against other fertilizers. Companies are exploring methods to produce ammonia through renewable energy powered electrolysis. This can help lower carbon footprint of ammonia production.
Market Drivers
Growth in global population: The world population is projected to reach around 9 billion by 2050 from the current level of around 7.7 billion. In order to meet the food demand of the growing population, agriculture production needs to increase substantially. This will propel the demand for fertilizers including ammonia.
Increasing fertilizer consumption in developing nations: Countries such as India, Brazil, Indonesia are experiencing rising disposable incomes and improvement in living standards. This has augmented the spending on agriculture inputs like fertilizers. Higher fertilizer use helps boost crop yields which is driving the ammonia consumption.
Rising livestock industry: Ammonia finds increasing usage as feed additive in the livestock industry. Expansion of the global meat and dairy sectors is fuelling the demand for animal feed and subsequently ammonia requirements.
Challenges in the Ammonia Market
The ammonia market faces a few challenges currently. One of the major challenges is fluctuating raw material prices. As natural gas and coal are the key raw materials used in ammonia production, volatility in their prices directly impacts the production cost of ammonia. Strict environmental norms regarding carbon emissions from fertilizer plants is another challenge. Developed regions have implemented stringent regulations regarding carbon footprint from industrial operations. This increases compliance costs for ammonia producers. Dependence on a few feedstock suppliers for raw materials is a challenge as it exposes the industry to supply risks.
SWOT Analysis
- Strength: Ammonia has widespread applications in fertilizer production, refrigerants and other chemicals. This provides a steady demand base.
- Weakness: Manufacturing ammonia is an energy intensive process which leads to high operating costs. Global trade is also dependent on a few exporters and importers of ammonia.
- Opportunity: Shift towards non-fossil fuel based processes such as renewable energy or hydrogen based production opens new opportunities. Expanding global population drives demand for agricultural products and fertilizers.
- Threats: Stringent environmental regulations add compliance burden. Volatility in prices of natural gas and coal raises production costs.
Geographical Regions
North America remains a major manufacturing hub for ammonia, accounting for over 30% of the global production capacity. China, India and Russia are other major manufacturing regions, due to abundant availability of coal and natural gas reserves. Growing agriculture and fertilizer sectors fuel ammonia demand in Asia Pacific and Latin America.
Fastest Growing Region
Asia Pacific region is forecast to be the fastest growing market for ammonia during the forecast period. This is attributed to strong demand from the agricultural and fertilizer sectors mainly in China and India due to rising population, arable land expansion and focus on food security. Government initiatives to enhance farm productivity will further accelerate ammonia consumption in Asia Pacific.
