Ammonia is an inorganic compound with the formula NH3. It is a colourless gas with a characteristic pungent smell. It is mainly used as a fertilizer in agriculture and also found its applications in various other industries like chemicals, pharmaceuticals, textiles, refrigerants etc. Ammonia is produced on an industrial scale using the Haber-Bosch process.Ammonia provides nitrogen to plants which is an essential nutrient for crop growth. Rising global population and need for food security has increased the demand for fertilizers significantly over the past few decades. Ammonia being a key fertilizer ingredient has benefitted from this growing demand.
The Global ammonia market is estimated to be valued at US$ 114 billion in 2031 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 rising global population has increased the demand for food significantly. As per UN estimates, the global population is expected to reach around 9.7 billion by 2050 which will further drive the demand for ammonia as fertilizer.
New technologies like methane pyrolysis are being developed which helps in more efficient production of ammonia. This would help boost its supply and meet the growing demand cost effectively.
Market Trends
Growing preference for nitrogen-based fertilizers - Nitrogenous fertilizers like ammonia, urea etc. see higher demand over other fertilizers due to their high nitrogen content and economic viability. This trend is expected to drive ammonia consumption.
Increase in natural gas based capacity additions - Many new ammonia plants are being set up based on natural gas due to abundant availability and relatively lower prices vis-à-vis other feedstocks. This is expected to boost ammonia output.
Market Opportunities
Rising biofuel production - Ammonia is used as a key ingredient in biodiesel production. Increasing global targets for biofuel blending is expected to generate more demand for ammonia.
Use in hydrogen economy - Ammonia is emerging as a potential carrier and storage medium for hydrogen. Its use in hydrogen-based transportation and power generation systems can open new avenues.
Impact of COVID-19 on Ammonia Market Growth
The COVID-19 outbreak has severely impacted the global ammonia market in 2020. The imposition of lockdowns led to the closure of many manufacturing facilities, disrupting the entire supply chain. With decline in industrial activity, the demand for ammonia fell drastically across major end-use industries like fertilizers, textiles, refrigeration, pharmaceuticals etc. This led to oversupply situations in North America and Europe. Some of the projects planned for capacity expansion were also stalled during this period owing to labor shortages and financial constraints faced by the companies.
However, with gradual lifting of restrictions and restarting of industries from mid-2021, the market started recovering. The demand is steadily rising from agricultural sector to meet the increasing food demand of the growing global population. Fertilizer plants are ramping up their productions to pre-COVID levels. Manufacturers are focusing on developing innovative and cost-effective production technologies to cater to the reviving demands. Project expansion activities have also resumed. The market is anticipated to get back on the growth trajectory and surpass its pre-pandemic size by 2024. Continuous investments in agricultural sector will be crucial for the sustainable growth of ammonia market in the coming years.
Europe remains the largest regional market for ammonia, accounting for over 30% of the global supply in 2023. Availability of raw materials, technical expertise and widespread fertilizer manufacturing facilities contribute to its dominance. However, Asia Pacific is identified as the fastest growing regional market, expanding at a CAGR of around 8% during the forecast period. Increased agricultural activities and growth of allied industries like textiles are driving the demands in countries like China, India and Indonesia. Governments in the emerging economies are promoting urea fertilizer production to improve farm outputs. This makes the Asia Pacific region most lucrative for ammonia producers seeking new investment avenues.
