The Global Ammonia Market Growth is Propelled by Growing Fertilizer Demand

 

The global ammonia market is estimated to be valued at US$ 91.42 billion in 2024 and is expected to exhibit a CAGR of 6.5% over the forecast period of 2024-2031.

Ammonia has wide applications in fertilizer production, wastewater treatment plants, and refrigeration systems owing to its physical and chemical properties. It is majorly produced through the Haber-Bosch process and serves as a key building block for the production of a variety of nitrogen-containing compounds. Rising global fertilizer consumption to meet the increasing food demand is one of the primary factors driving the demand for ammonia.

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. Major players are investing heavily in capacity expansions to cater to the rising global demand. For instance, Yara International ASA is expanding its ammonia production facility in Ferrara, Italy by 450,000 tons per annum with an investment of US$ 450 million.

The exponential growth in global population and changing dietary patterns have significantly increased food demand worldwide. This in turn is propelling the demand for nitrogen-based fertilizers which serves as a major growth opportunity for ammonia producers. Additionally, growing agricultural production in developing nations such as India and China will drive fertilizer consumption in the coming years. Major ammonia producers are expanding their production facilities across Asia Pacific and Africa to leverage the opportunities in high growth markets.

Market drivers and restrain

The primary driver for ammonia market growth is increasing consumption of nitrogen fertilizers worldwide. Ammonia constitutes over 80% of the global nitrogen fertilizer production. According to FAO, fertilizer demand across developing countries is anticipated to grow at over 3% CAGR until 2030. This will necessitate expansion of fertilizer production capacities leading to more ammonia demand.

Stringent environment norms regarding emissions from ammonia plants is a key challenge for market players. The Haber-Bosch process employed for commercial ammonia synthesis emit greenhouse gases such as CO2. Production units face regulatory pressure to reduce their carbon footprint which increases capital and operating costs. Additionally, fluctuations in natural gas prices also act as a restraint as natural gas is the primary feedstock for ammonia synthesis using steam reforming. Around 2% of global natural gas production is consumed by the ammonia industry.

Segment Analysis

The ammonia market is segmented based on application into fertilizers, industrial chemicals, refrigerants and pharmaceuticals. The fertilizer segment currently dominates the market and accounts for over 85% of total ammonia consumed globally. Ammonia is predominantly used in the production of urea and other nitrogen fertilizers that contain ammonium, nitrate or both. The global demand for fertilizers continues to rise in tandem with the growth in global population and declining per capita cultivated area of land. This makes ammonia indispensable to sustain agricultural yields.

Global Analysis

The Asia Pacific region is currently the largest as well as the fastest growing market for ammonia globally. China alone accounts for over 40% of total global ammonia consumption due to its large fertilizer industry and a growing chemicals sector. Other Asian countries including India and Southeast Asian nations are also witnessing increased demand for ammonia driven by their burgeoning populations and increased food production. While North America and Europe are mature markets, they continue to see steady demand mainly from their chemical industries. Emerging economies in Latin America and Middle East & Africa are expected to fuel future growth in the global ammonia market over the forecast period.