Ammonia Market Size, Share, Industry Trends

The ammonia market has witnessed remarkable growth over the past decade, primarily driven by its crucial role as a fertilizer, which is vital for ensuring food security in emerging economies. The pressing need to enhance the per unit yield of cultivated crops has underscored the importance of ammonia, a key raw material in the production of agrichemicals. Ammonia is manufactured using the Haber-Bosch method, which involves the use of aluminum oxide, magnesium oxide, and iron oxide. This method converts atmospheric nitrogen into ammonia through a hydrogen reaction facilitated by a metal catalyst under extreme temperatures. Initially used for manufacturing explosives during World War I, the process is now predominantly utilized for fertilizer production in the 21st century.

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50% Spike in Primary Crop Production Since the Turn of the Century Necessitates Urea

Ammonia serves as the building block for ammonium nitrate, an essential component for farm crops. Its versatility allows it to be easily converted into various nitrogen fertilizers, making it indispensable for the agriculture sector. This sector accounts for the majority of the ammonia market, a trend expected to continue in the medium term. Urea, a dry fertilizer steadily replacing ammonium nitrate, is produced by reacting carbon dioxide with ammonia. According to the Food & Agriculture Organization (FAO), primary crop production reached 9.2 billion tonnes in 2018, marking a 50% increase from 2000. Although there was a slight decline in 2019 due to currency fluctuations, the U.S.-China trade war, and Russia-Ukraine tensions, the projected global population of 10 billion by 2050 bodes well for companies in the ammonia market.

Focus on Ammonia Refrigeration Systems to Address Global Warming Concerns

Ammonia's environmentally friendly nature, superior heat transfer properties, lower cost, and higher efficiency make it an ideal refrigerant. In the face of climate change, ammonia refrigeration systems offer a perfect solution, boasting zero Global Warming Potential (GWP) and Ozone Depletion Potential (ODP). Ammonia is used as a refrigerant in cold chain facilities, petrochemical units, and combined cycle power plants. The cost of ammonia can be 10% less than conventional hydrofluorocarbon (HFC) refrigerants, with 20% greater efficiency at full capacity, making it a valuable option for stakeholders in the ammonia market.

Green Ammonia Could Power the Future of the Ammonia Market if Production Costs are Reduced

Climate change remains a top concern for policymakers, prompting chemical companies to invest heavily in green ammonia. In this process, hydrogen extracted from water electrolysis via alternative energy sources replaces hydrocarbon-based hydrogen, resulting in CO2-free ammonia production. Companies are also exploring carbon capture and storage to mitigate the environmental impact of conventional ammonia, creating 'blue ammonia'. Despite being in the experimental phase and costing four times more than conventional ammonia, the potential for green ammonia to revolutionize the market is significant, depending on governmental and consumer support.

Governmental Push to Ensure Food Security Positions China as a Leader in the Ammonia Market

According to the World Bank, China's GDP grew by 5.95% in 2019, despite the trade war with the U.S., and continued to grow by 2.3% in 2020 amid the COVID-19 pandemic. China is the largest producer of cotton, wheat, rice, and potatoes, with its government prioritizing agriculture to overcome historical food shortages. As only a small fraction of China's vast terrain is arable land, the government is focused on modernizing the industry, driving demand for ammonium nitrate fertilizer. The U.S., which currently imports significant quantities of ammonia, is planning massive capacity expansions to reduce its dependency on imports. Integrated and standalone capacity additions of up to five million metric tonnes are expected from U.S. shale gas. In Europe, Russia remains a critical ammonia supplier and is projected to have surplus capacity throughout the forecast period.

Intense Competition Drives Firms to Invest in M&A to Stay Competitive in the Ammonia Market

The ammonia market is characterized by intense competition and fragmentation. Key companies profiled in this report include Yara International ASA, CF Industries Holdings, Inc., Potash Corp, Nutrien, OCI Nitrogen, Haifa Chemicals Ltd., CNPC (China National Petroleum Corporation), Trammo Inc., and Haldor Topsoe A/S.

In March 2021, OCI Nitrogen entered into an agreement with Eastern Pacific Shipping and the Hartmann Group to commercialize methane and ammonia as future shipping fuels by 2024. In 2020, Industries Qatar, a subsidiary of Qatar Petroleum, authorized the acquisition of a 25% stake in Qatar Fertilizer Company at its August board meeting, aligning with the firm's strategy to bolster its downstream presence and create value in the ammonia market.

Regional Classification of the Global Ammonia Market:

North America:

U.S.

Canada

Europe:

Germany

France

Spain

U.K.

Italy

Russia

Rest of Europe

Asia Pacific:

China

Japan

India

Southeast Asia

Rest of Asia Pacific

Latin America:

Brazil

Mexico

Rest of Latin America

Middle East and Africa:

GCC

South Africa

Rest of Middle East & Africa