February 25, 2024

The Australian Ammonia Market driven by strong demand from Agricultural Sector

Ammonia is one of the most important fertilizers used extensively in agricultural activities in Australia. It is used majorly in the production of nitrogenous fertilizers like urea, ammonium nitrate and others. The agricultural sector in Australia has been growing at a steady pace over the past few years due to increasing farm outputs and exports of major crops including wheat, barley and rice. Ammonia derived nitrogen fertilizers plays a vital role in boosting crop yields thereby meeting the rising global food demand. The agricultural production is highly supported by the Australian government through subsidies and incentives encouraging extensive use of fertilizers.

The global Australian Ammonia Market is estimated to be valued at US$ 934.85 Million in 2024 and is expected to exhibit a CAGR of 6.4% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.

Market key trends:

One of the key trends witnessed in the Australian ammonia market is increasing focus on green ammonia production. There is a significant emphasis on developing renewable energy-based methods to produce ammonia. There is a transition towards using renewable electricity from solar and wind for electrolysis of water to produce hydrogen, which is then combined with nitrogen from air to yield green ammonia. This helps reduce carbon footprint of ammonia production. The Australian government is supporting several pilot projects through funding to commercialize green ammonia and position the country as major exporter of the carbon-neutral fuel source to worldwide markets especially in Asia Pacific. This shift towards cleaner production of ammonia will define future outlook of the market over the coming years.

Porter’s Analysis

  • Threat of new entrants: The threat of new entrants in the Australia ammonia market is moderate. Large capital investments are required to build ammonia production facilities, creating a barrier. However, the high demand from end-use industries creates opportunities.
  • Bargaining power of buyers: The bargaining power of buyers is high given the fragmented nature of the market. Buyers can negotiate better prices from various suppliers. Imports also increase competition.
  • Bargaining power of suppliers: The bargaining power of suppliers is moderate. While a few major players control supply, long-term contracts and availability of substitutes balance their power.
  • Threat of new substitutes: The threat of substitutes is low as ammonia has few direct substitutes that can provide similar technical and economic advantages in end-use industries.
    Competitive rivalry: The competitive rivalry is high due to the presence of few large players. Companies compete on pricing, technologies, and dealer networks.

Key Takeaways

The Australia ammonia market is expected to witness high growth over the forecast period supported by increasing demand from fertilizer and chemical industries. Ammonia utilization in agriculture is rising due to the growth of the fertilizer industry in Australia. Expanding population and agricultural exports are driving fertilizer consumption.

Regional analysis: New South Wales dominates the Australian ammonia market owing to the presence of key players such as Incitec Pivot and Orica. Ammonia production facilities are located near ports for exports. Victoria is another major producer due to its large chemical industry.

Key players: Key players operating in the Australia ammonia market are Incitec Pivot Limited, Yara International ASA, Orica Limited, and Wesfarmers Chemicals, Energy & Fertilisers. Incitec Pivot and Orica control over 60% of domestic ammonia supply. Players are focusing on capacity expansions to cater to growing demand.

*Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it