The ammonia market plays a vital role in agricultural production and chemical manufacturing. Ammonia is primarily used as a raw material for the production of nitrogen fertilizers, which boost crop yields to feed the rising global population. It is also used in the synthesis of numerous commercial and industrial chemical products.
The global ammonia market is estimated to be valued at US$119.8 billion in 2024 and is expected to exhibit a CAGR of 6.1% over the forecast period 2024 to 2031.
As one of the most widely produced inorganic chemicals, ammonia has numerous industrial applications. It is used as a building block for numerous nitrogen-containing products including fertilizers, explosives, plastics, fibers and more. Ammonia enables high agricultural productivity by enriching soil with nitrogen. Around 80-90% of global ammonia output is used for fertilizer production, mainly urea, mono-ammonium phosphate, and ammonium nitrate. An increasing world population and rising demand for food has driven fertilizer consumption higher.
Key Takeaways
Key players operating in the ammonia market are Yara International, BASF, CF Industries, Nutrien, OCI NV, EuroChem, SABIC and Koch Fertilizer. These companies are focusing on capacity expansion plans and strategic partnerships to capitalize on market opportunities.
Growing Ammonia Market Demand is propelling fertilizer consumption higher, especially in major agricultural economies like China, India, Brazil and the US. Robust demand from the agricultural sector is likely to support ammonia consumption over the coming years.
Several producers are targeting regions with ideal ammonia supply chain logistics and developing markets with rising food demand. The Asia Pacific region dominates in terms of capacity additions amid strong fertilizer consumption growth in China and India. However, promising opportunities exist in other developing markets as well.
Market Key Trends
One key trend in the ammonia market is the increasing production via green processes. Hydrogen is a critical input for ammonia synthesis and most hydrogen is currently produced from fossil fuels. However, low-carbon hydrogen derived from water electrolysis using renewable power offers an environmentally sustainable alternative. Several projects are underway to build large-scale green ammonia plants combining variable wind and solar power with hydrogen electrolysis and ammonia production. This helps lower emissions and diversify applications in shipping fuel and power generation sectors apart from fertilizers.
Porter's Analysis
Threat of new entrants: New companies can enter the market with relative ease as the capital required is moderate. However, established players have economies of scale and customer loyalty advantages.
Bargaining power of buyers: Buyers have moderate bargaining power due to the availability of substitute products and undifferentiated nature of the product. However, established buyers prefer to deal with known suppliers for convenience.
Bargaining power of suppliers: A few large companies dominate the supply of key raw materials like natural gas. This gives them significant influence over prices charged.
Threat of new substitutes: Substitute products like urea provide competition. However, ammonia has certain performance advantages over substitutes for many industrial applications.
Competitive rivalry: The market has major global players competing intensely on pricing, quality and customer service. Smaller regional players also compete based on proximity.
Geographical regions:
North America currently holds the largest share of the global ammonia market, both in terms of value and volume. Abundant natural gas reserves and proximity to key end-use industries drive regional demand.
The Asia Pacific region is expected to be the fastest growing market for ammonia during the forecast period. Countries like China, India and Indonesia are experiencing rapid industrialization and infrastructure growth, driving demand from the fertilizer, refrigerant and other end-use sectors.
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Ravina Pandya, Content Writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemical and materials, etc. (https://www.linkedin.com/in/ravina-pandya-1a3984191)