Ammonia
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Ammonia Market Outlook

• The global demand is expected to grow at a CAGR of 3-4 percent during 2020–2024: The impetus for this growth comes from demand in Asia, which is expected to grow at 3–4 percent, due to increased demand from the agricultural segment
• The non-fertilizer sector accounts for 13 percent of the global ammonium-consuming segment
• Increasing mining activities in the Asian and LATAM markets are expected to drive the demand in these regions

Demand Market Outlook

• The global supply is expected to improve in the next 2–3 years, due to capacity additions, mainly in the US
• This will increase the availability of ammonium for the export market
• A major demand is expected to come from Asian and the US markets, since most of the derivative units (fertilizer, direct application, and industrial usage) are lined up in the US and Asia. The fertilizer (3–4 percent growth) and industrial sector (3–4 percent growth) would be the key segments driving the demand. Around 10 MMT capacity additions are planned for the fertilizer production

Global Ammonia Market Size

• Demand to grow at a CAGR of 3.5-4.0 percent: The total global demand is expected to increase from 196MMT to 225MMT by 2023
• The fertilizer segment to drive the demand: Significant demand is expected from the fertilizer chemicals segment with the growing population in the developing region. NPK/NP fertilizer contributes to a major portion of the demand
• The US import dependency to reduce: The US has remained the biggest importer in the past decade. However, moving forward, the US dependency on imports is expected to decline sharply, ending the era of massive imports from Trinidad and Tobago. This is due to the huge capacity additions expected to come online during 2020–2024

Global Capacity: Demand Analysis

• Huge capacity additions in the US, Russia, and Asia: More than a dozen of standalone and integrated ammonium plants are nearing completion, and it is expected to bring additional ammonia available in the merchant market. Thereby, reducing the pressure on the ammonium prices

Global Trade Dynamics

• Globally, only 12 percent of the ammonia produced is traded, and the rest is used captively to convert into nitrogen-based fertilizers
• North America: Currently, the US imports almost 3.7 MMT of ammonia, however, moving forward, imports are expected to come down, due to huge capacity additions of around 5 MMT lined up for the US, based on shale gas
• EU: Russia is expected to remain ammonia surplus (4.3 MMT excess), and it is expected to cater to the merchant market
• Asia: The Middle East is expected to remain as the key supplier of ammonia to India

Ammonia Market Outlook

• APAC is expected to drive the demand: APAC will account for almost 50 percent of the global capacity by 2020 
• Major capacity additions planned: Huge availability of low-cost natural gas in the Middle East and Africa is expected to push the ammonium capacity in these regions by an additional 12 MMT by 2020
• The huge capacity addition in ammonia might ease the demand situation in the short term, however, with increasing population and less availability of arable land, the demand for ammonia is expected to remain firm in the long run 

Global Demand by Application

• Demand from the non-fertilizer segment is expected to grow at a CAGR of 5 percent 
• The application of ammonia as refrigerants is expected to drive the demand from the non-fertilizer segment

Downstream Demand Outlook

• Demand in the refrigerant industry to grow at a CAGR of 5–6 percent: Owing to the better properties of ammonia as a refrigerant chemical, it is expected to drive the demand for ammonia
• Demand for ammonium nitrate is expected to grow at a CAGR of 2–3 percent: Demand for ammonium nitrate is expected to increase from the APAC region, due to the new agricultural policy. This policy has permitted the usage of ammonia in all agro and explosive products. This is expected to drive the demand in the APAC and Middle Eastern regions
• Agricultural policy changes in Western Europe for ammonium nitrate is expected to decrease the production: The ammonium nitrate production has decreased around 0.2 MMT in the western European market, after the implementation of the new agricultural policy
• DAP/MAP demand is increasing from the Chinese market: A significant growth is expected in this segment, due to high crop yield in the Chinese landscape

Global Exports

• Excess demand in the US and established trade route between the US and Canada lead to trade ease between these regions. Canada exports around 30 percent of the ammonia produced to the US market
• Capacity expansion in Russia has significantly added to the availability of ammonia in the merchant chemicals market, and it is expected to continue in the near future

Ammonia Market Report Summary

The ammonia market is expected to grow at a rate of 3 percent per year from 2016 until the end of 2022 according to experts in the field. The major supply markets of ammonia include Asia, North America, and the EU. Asia has the largest supply market as it accounts for 59 percent of the market. Next is the EU that accounts for 24 percent of the supply market share. North America accounts for 10 percent of the market while the rest of the world accounts for 8 percent of the ammonia supply share. This shows that Asia is the leader when it comes to ammonia supply share in the world at present and according to experts this trend might continue well into the future.

The global capacity of ammonia is 239 MMT in 2017 while the global demand is lesser at 189 MMT in 2017. However, there is an expected increase in demand in the future. Experts in the field predict there to be an increase in demand of about 234 MMT by the end of 2022. The CAGR of ammonia demand will be more than 5.2 percent. It is vital to understand the production size as it gives a full picture of the capacities in various regions for the ammonia market. In North America, the production size is 24 MMT while in Europe the production size is much higher at 56 MMT. Numerous global suppliers of ammonia exist. Some of the top suppliers include Yara, Nutrien, CF Industries, GS Caltex, and Terra.

The end-user industries of ammonia and ammonia liquor/aqueous ammonia include pharmaceutical products, agriculture, mining, and textiles among others.  Ammonia is also used as a cleaning product and in the manufacture of products for sanitizing. According to the experts, the NPK/NP fertilizer contributes to the rise in the demand for ammonia and this will most likely continue in the future. This is particularly true in developing regions as they will have a higher demand for ammonia in the next few years. This is due to the increase in population in developing regions which will increase demand in sectors such as mining and agriculture. It is critical to note that more than 10 percent of the global consumption of ammonia is from the non-fertilizer sector. All ammonia that is produced is not traded. In fact, only 12 percent of it is traded while the rest is converted to fertilizers that are nitrogen-based.

The US is moving towards capacity additions that will have a major impact on the ammonia market. Experts predict that the global supply will improve within the next few years. This will continue till the end of 2022 according to experts. The US presently imports more than 3.5 MMT of ammonia. It is the largest region to import ammonia. It used to import ammonia from Trinidad and Tobago. However, it has planned capacity additions of more than 5 MMT based on shale gas. This means there will be a big
reduction in imports from that region in the US. 30 percent of ammonia that the US market produces is exported by Canada. As there is a trade route in these regions, trading is expected to improve further.

In the EU region, Russia will have an excess of ammonia as before. That is, Russia always had excess ammonia. Russia generally has surplus ammonia of more than 4 MMT. This excess production can help keep the ammonia prices stable in the future among other factors. In Asia, India imports ammonia from the Middle East and this can continue in the future until capacity additions are completed in various regions of Asia. Globally, 10 MMT of capacity additions is expected specifically of fertilizer production. This is because of the expected growth of up to 4 percent growth in the fertilizer market. Ammonia is required in the industrial sector too which is expected to grow in the region. The expected growth of this region is anywhere between 3 percent and 4 percent.

Ammonia Market Forecast: Asia and the US markets are going to be the major markets that will drive the ammonia market. These are going to witness high demands in the future. The reason behind this is that both of them are planning derivative units. These derivative units include industrial usage, fertilizer, and direct application of ammonia. The US is going to turn into an exporter rather than a major importer because the production is going to increase rapidly in this region. In fact, it is going to turn into a net exporter in the next few years because it will meet its own demand and leave enough that can get exported to other regions in the world.

The ammonia price is likely to become stable because of capacity additions taking place at the moment. Numerous capacity additions are planned for the future too which can stabilize the ammonia commodity price in the market as there won’t be as much pressure on it. This is because of the excess ammonia that will be available globally as production will increase manifold across the globe. For example, regions such as Asia, the US, and Russia have many plants that are nearly completed which means an increase in ammonia production can be expected soon. These are integrated plants and standalone ones that are being focused on to ensure ammonia supply can meet the expected increase in ammonia demand.

In the ammonia market, there are two types of engagements that are popular; contract transactions and spot transactions. In the US, most of the transactions are contract-based. That is, up to 70 percent of the transactions are contract transactions. In Asia, 40 percent of the transactions are spot transactions. While in the EU, both spot transactions and contract transactions are equally preferred in the ammonia market. The contract period is anywhere between 1 and 2 years in the ammonia market. The ammonia price revisions can take place either every month or every quarter. When it comes to buyer power, Asia and North America have medium buyer power. The EU has low buyer power. The base oil supplier power is medium in North America and Asia in the ammonia market. In the EU, the base oil supplier power is high.