Global Industry Analysis (2017- 2020) – Growth Trends and Market Forecast (2021 – 2025)
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Versatility and Widespread Availability of Ammonia Make it Ideal Chemical Intermediate
The ammonia market has grown immensely in the past decade due to its application as a fertilizer to ensure food security in emerging economies. There is a pressing need to increase the per unit yield of cultivated crops. As a building block of nitrogen, ammonia is a key raw material in the production of agrichemicals. Ammonia is manufactured by the Haber-Bosch method with aluminium oxide, magnesium oxide, and iron oxide used in the process. The Haber- Bosch method converts atmospheric nitrogen into ammonia through a hydrogen reaction via a metal catalyst under extreme temperatures. Used to manufacture explosives during World War I, the process is mainly used to produce fertilizer in the 21st century.
50% Spike in Primary Crop Production Since the Turn of the Century Necessitates Urea
Ammonia is the building block for ammonium nitrate – an essential element for farm crops. Ammonia can be easily converted into various N fertilizers. Thus, it is hardly surprising that the agriculture segment accounts for the vast majority of the ammonia market which should only grow in the medium term. A dry fertilizer steadily replacing ammonium nitrate is urea – a material produced by the reaction of carbon dioxide with ammonia. According to the Food & Agriculture Organization (FAO), primary crop production in 2018 was 9.2 billion tonnes – a 50% hike from 2000. Although production declined slightly in 2019 on account of currency fluctuations, the U.S.- China trade war, and Russia- Ukraine tensions, the world population is predicted to be 10 billion by 2050 – auguring well for companies in the ammonia market.
Focus on Ammonia Refrigeration Systems to Nip Global Warming Concerns in the Bud
Ammonia can be used as a refrigerant because of its environmentally friendly nature, superior heat transfer, lower cost, and higher efficiency. In an era of climate change, ammonia refrigeration systems are the perfect solution as they have 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 along with being 20% more efficient at full capacity making it worth the while of prominent stakeholders in the ammonia market.
Green Ammonia Could Power Future of the Ammonia Market if Production Costs Slashed
Climate change is the paramount concern of policymakers today. Chemical companies are investing heavily in green ammonia where hydrogen extracted from water electrolysis via alternative energy replaces hydrocarbon-based hydrogens, resulting in ammonia production becoming CO2 free. Companies are looking at carbon capture and storage to mitigate the environmental footprint of conventional ammonia through the creation of ‘blue ammonia’. While the production cost is still four times that of conventional ammonia and it is in the experimental phase, it remains to be seen if governments and consumers decide if it is worth the effort or if familiarity breeds resistance in the ammonia market.
Governmental Push to Ensure Food Security Results in China Leading Ammonia Market
Data from the World Bank showed that China’s GDP grew 5.95% in 2019, trade war with the U.S. notwithstanding. Even COVID-19 failed to put a downer in the country’s leap forward as it grew by 2.3% in 2020. The nation is the largest producer of cotton, wheat, rice, and potatoes. The national government has prioritized agriculture as it has suffered from crippling historical food shortages. As only a small fraction of China’s vast terrain is arable land, the government seeks to modernize the industry making the demand for ammonium nitrate fertilizer limitless. At present, the U.S. imports huge quantities of ammonia but massive capacity expansions are underway to reduce their dependency on other nations. Integrated and standalone capacity additions to the tune of five million metric tonnes are lined up for U.S. based shale gas. In Europe, Russia is a critical supplier of ammonia to Europe and is likely to have a surplus capacity for the duration of the forecast period.
Brutal Competition Compels Firms to Invest in M&A to Stay Ahead in Ammonia Market
The ammonia market is characterized by intense competition and high levels of fragmentation. Companies profiled in this report on the ammonia market 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 the latter’s 25% stake in Qatar Fertilizer Company at its board meeting in August in line with the firm’s strategy of bolstering its downstream presence and creating value in the ammonia market.