Urea
Market, Supplier, Risk and
Competitive Intelligence

Industry Outlook & Drivers

Global Market Outlook on Urea

The urea market is set to experience a soft balance in the short term, moving to potential growing surpluses in the long  term (until 2021 – 2022). Surplus situation is expected to persist during the next five years, reaching 8 percent of the potential supply availability .The balance in the short term is resulting from China's contraction in capacity and decline in export share, owing to ‘zero  growth' policy in place for fertilizer demand, which largely impacts urea, since China has always been the dominant demand center (35 percent of the global demand); however, recent developments of poor economies of scale (high input coal costs) and tax reform (13 percent VAT on fertilizer) are keeping the global urea market in balance.

Major urea supply markets: North America: 5 percent, Middle East: 9 percent, Asia: 60 percent, Europe: 11 percent.

Top suppliers in the global urea market are Yara, QAFCO, PT Pupuk Timur, IFFCO, CF Industries, and Agrium.

Floor urea price set by China or ammonium prices are used as a reference for the international markets.

According tourea market analysis, key demand drivers are Nitrogen Application and Fertilizer Market.

The production size of CO(NH2)2 or urea in North America was 10 MMT; in Europe it was 18 MMT; in China it was 63 MMT in 2016.

North America has medium supplier and buyer power, while Asia has medium supplier and buyer power when it comes to carbamide. The EU has high supplier power and a low buyer power.

Globally, one of the constraints in the urea market outlook is the health hazards associated with urea such as chemicals.

Demand Market Outlook for Major Urea Markets

• N-Fertilizer value drivers have a profound impact on the urea market. Some of the major drivers that result in having an effect on urea:
• Chinese coal prices -->Supply-driven price for urea
• Change in grain inventory/price --> Urea demand Active value drivers of urea will impact other nitrogen fertilizer prices, since urea and its derivatives are the most commonly used fertilizers across major markets, like India, North America, and Brazil

•  The increasing demand in fertilizers will help propel the growth of the urea market. The fertilizer and fertilizer chemicals markets are likely to expand in the future.

• The global urea market demand is expected to increase at a CAGR of 2% until the end of 2022.

• The automotive industry is expected to increase its demand for urea, particularly technical grade urea, because of the increase in adblue consumption in the industry.

•  Other uses of urea is to produce melamine and ammonia.

Industry Best Practices: Pricing Dynamics

• While energy costs for the ammonia swing, producers set a price floor for ammonia
• The ammonia price sets a price for urea
• If the urea price drops below this floor, more ammonia will be offered for sale, less urea will be sold, and the relationship will be restored
• China is responsible for setting the floor prices of urea sometimes. Otherwise, in the international markets, ammonium prices are referred to in order to determine the price of urea.
• The urea price forecast depends on various factors.
• In a tight supply–demand scenario for nitrogen, where there is a demand-driven urea margin, the correlation is low. Such a scenario is often witnessed during the period with strong prices for agricultural soft commodities

Global Market Size: Urea

• Urea fertilizer prices are looking to firm up after years of weakness. This is resulting from signs of global tightening, resulting from strong Indian imports combined with low export availability out of China. Exports from China are dwindling because of low global prices and very high cost of production, owing to the huge increase in bituminous coal prices in China
• Although capacity had increased in the US, it may not cover the export volume, which will be lost from China. These factors are expected to drive urea prices upward, which will eventually enable the urea market to breach $65 billion mark by 2020
• Key drivers for growth in urea's market size will be strategic alliances and acquisitions between global leaders, which will determine the future growth of the urea market through consolidation; however, growth in urea will be offset by other N-fertilizer types, like nitrate, which is more environmental friendly. For instance, in Europe, demand for urea is paling, owing to its impact on the environment (long carbon footprint life cycle), and there are alternatives to urea, which have significantly lower impact than urea-based products

Global Supply–Demand Analysis

• During the last one and half decade, China added capacity at a rapid pace that totally out paced the global demand. Currently, the trend is getting reversed with other regions adding more capacity and China idling its capacity, due to stringent environmental norms and higher production cost. This is expected to bring some balance in global supply – demand

• China is one of the largest urea-formaldehyde resin producers in the world. As China’s demand will likely stay the same or increase, the demand for it is likely to increase too.

• Urea represents half of the total nitrogen output and will contribute to two-thirds of the projected ammonia capacity increment over the next five years.The global urea capacity is projected to increase by 17 MT to 226 MT in 2021. On a regional basis, Africa, North America, and EECA will account for 70 percent of the overall capacity growth

Supply and demand outlook: 

• Global urea supply is estimated to be at 190 MT in 2022, growing at 2 percent annually over 2017–2022

• Developing nation to push the demand: Sustained annual growth of urea demand, owing to rise in consumption from LATAM and South Asian markets

• Asia-Pacific market will continue to rule when it comes to urea demand and supply in the coming years. As it is the largest market size at present, experts predict that this trend will continue because of an increase in consumption and production in that region.
   

Urea Market Overview

• In 2017, fertilizer applications accounted for an estimated 82 percent of global urea consumption. 
• According to experts the technical-grade urea can witness an increase in growth by year 2024. The applications of technical grade urea include medical drugs, cosmetics, dyes, disinfectants, and glue.
• The top 10 urea exporting countries account for more than 40 percent of the global trade, with China emerging as the largest supplier. The industry is extremely fragmented, with close to 300 prominent suppliers globally
• The top 12–13 players account for only 20 percent of the global market, in terms of volume. Most of the urea suppliers (major) are vertically integrated.
• Suppliers in the Middle East, like QAFCO, are major exporters, as there is no domestic demand in their region
• Urea cost structure analysis shows that while energy costs for the ammonium-swing producers set a price floor for ammonia, the ammonia price sets a floor for the urea price. If the urea price drops below this floor, more ammonia will be offered for sale, less urea will be sold, and the relationship will be restored
• The major opportunity for the urea market is the emergence of new markets. As the industrial sector is using urea more and more, there is likely to be an increase in its demand according to the urea market outlook analysis. For example, urea is used to make urea formaldehyde resins, diesel exhaust fluids, animal feed, and melamine.
   

Why You Should Buy This Report

• The report contains urea cost structure breakdown and urea price forecast. 
• It gives the market outlook, supply-demand trend analysis and trade dynamics of the regional and global urea market. 
• The report does the Porter’s five force analysis of the North American, Asian and European urea market.
• It lists the various industry drivers and constraints.
• The report gives an exhaustive supplier list and does the SWOT analysis of key suppliers like SABIC, Sinofert Holdings, etc.