by Ammonia is a colorless gas with a very strong and suffocating odor. It is commonly used as a raw material to produce fertilizers, plastics, fibers, and other chemicals. Ammonia offers several advantages such as high nitrogen content and easy availability. It plays a crucial role in improving crop yields to meet the food demands of the growing global population. The rising demand for food is consequently boosting the demand for nitrogen fertilizers, which is driving the ammonia market.
The Global ammonia market is estimated to be valued at US$ 87.31 billion in 2024 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. Yara International ASA is one of the leading producers and distributors of fertilizers and chemicals globally.
The growing population and rising food demand are fueling the consumption of fertilizers, which is positively influencing the ammonia market. According to estimates, the global population is expected to reach around 9.7 billion by 2050 putting immense pressure on agricultural production. This ever-increasing food demand is spurring the need for high crop yields, thereby propelling the demand for ammonia-based fertilizers.
Major players in the ammonia market are expanding their production facilities across various geographies to cater to the growing demand from developing regions. For instance, Yara International ASA is constructing a large ammonia plant in Egypt with a yearly production capacity of 1.1 million tons. Nutrien Ltd. is expanding its Geismar Ammonia facility in Louisiana, USA to increase capacity by 50%. These investments are expected to strengthen the companies’ presence in global ammonia trade.
Market key trends
One of the key trends gaining traction in the ammonia market is the increasing preference for clean ammonia. Clean ammonia is ammonia produced from non-fossil fuel sources like renewables, biomass, and nuclear, thereby resulting in lower carbon emissions compared to conventional gray ammonia. It can be utilized as an alternative carbon-neutral marine and road transport fuel. Many countries are investing heavily in clean ammonia projects to reduce dependence on fossil fuels and lower GHG emissions from the fertilizer industry over the long run. For instance, Japan is aiming to commercially produce clean ammonia by 2030 to meet its decarbonization goals in the maritime and power sectors.
Porter’s Analysis
- Threat of new entrants: The ammonia market requires high capital investment to enter due to the need for large industrial plants and equipment.
- Bargaining power of buyers: Buyers have moderate bargaining power due to the availability of substitutes like urea. However, ammonia is an essential raw material and buyers cannot do without it.
- Bargaining power of suppliers: Suppliers have moderate to high bargaining power due to the global oligopolistic market landscape with a few large suppliers.
- Threat of new substitutes: There exist close substitutes for ammonia like urea but ammonia has some advantages over urea in terms of uses.
- Competitive rivalry: The global ammonia market landscape is concentrated with the top players controlling a major share of the market.
Geographical Regions with Highest Market Share
The Asia Pacific region accounts for the largest share of the global ammonia market in terms of value. Countries like China, India, Indonesia, South Korea and Japan dominate the ammonia consumption in this region due to large manufacturing and agricultural sectors. Ammonia derivatives like urea, nitric acid and ammonium nitrate see high demand from construction and agriculture industries in Asia Pacific.
Fastest Growing Geographical Region
The Middle East and Africa region is expected to witness the fastest growth in the ammonia market during the forecast period. This is due to increased investment in ammonia production plants across countries like Saudi Arabia, UAE and Algeria. New plants coming up cater to both export markets as well as meet growing domestic demand for fertilizers and industrial chemicals. The growing population, industrialization and urbanization are driving demand in the Middle East and African region.
