Ammonia Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Ammonia Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The ammonia market is estimated to reach 197,216.85 kilo tons by 2026, registering a CAGR of 2.03% during the forecast period (2021-2026). The COVID-19 outbreak is likely to bring several short-term and long-term consequences in various industries, such as agriculture, textiles, mining, and other end-user industries, which may affect the ammonia market. The agriculture industry was widely impacted due to supply chain disruption and halt in the production of fertilizer manufacturing companies due to lockdown and workforce shortages, thus, adversely affecting the ammonia market. For instance, across the world, the lockdowns in Europe have greatly disrupted food supply chains. According to Syngenta, about 46% of large European farming businesses have been impacted by the COVID-19 pandemic.

Key Highlights

• The major factor that is driving the market studied is the growing demand in the agriculture industry and its increasing usage for the production of explosives. About 80% of the ammonia produced is used in fertilizer to help sustain food production for millions of people in the country. The production of food crops naturally depletes soil nutrient supplies. In order to maintain healthy crops, farmers rely on fertilizers to keep their soils productive. Fertilizers can also help increase levels of essential nutrients, like zinc, selenium, and boron, in food crops.
• The hazardous effects of ammonia in its concentrated form are likely to hinder the growth of the market studied.
• The use of ammonia as a refrigerant is likely to act as an opportunity to the market studied during the forecast period.
• Asia-Pacific dominated the market across the world, with the largest consumption from countries, such as China and India, and it is further expected to remain the same in the future.

Key Market TrendsAgriculture Industry to Dominates the Market

Ammonia, also known as NH3, is one of the most efficient and widely used sources of nitrogen for plant growth. The advantages of ammonia's relatively easy application and ready availability have led to its increased use as a fertilizer. Ammonia is a basic building block for ammonium nitrate fertilizer, which releases nitrogen, an essential nutrient for growing plants, including farm crops and lawns. Moreover, it can be converted into a variety of common N fertilizers.​ The agriculture industry dominates the global ammonia market, with an estimated market share of around 80%. Ammonia is majorly used in fertilizers, and its usage has only been increasing through the years, driving its usage in the agriculture market throughout the forecast period

Fertilizers are plant nutrients that are required for the growth of crops. The fertilizers market is also expected to expand, with agriculture production growing through the years (primarily owing to the growing population, increasing urbanization, and rising disposable income of individuals). Consumption of meat, dairy products, fish, sugar, fruits, and vegetables has been experiencing rapid growth compared to the consumption of cereals. Urea is a dry nitrogen material produced by reacting ammonia with carbon dioxide. It contains the highest percentage of nitrogen among the commonly used dry fertilizers. It is rapidly replacing ammonium nitrate in recent years. After a slow growth of 1.3% in 2018, the demand for agriculture was dropping by 1% in 2019, due to combination of low international prices for most crops, unfavorable weather in important agricultural and fertilizer consuming areas, currency depreciation in some fertilizer-importing countries trade tensions between China and the United States and between Russia and Ukraine, sanctions against Iran, and the increasing emphasis on the more efficient use of fertilizers in developed countries and China.

Although the medium-term outlook for world agriculture remains broadly unchanged, the agricultural production growth rates are steadily declining. Additionally, expectations to improve fertilizer use efficiency and recycle more organic nutrient sources will put pressure on fertilizer demand in developed countries and an increasing number of emerging economies. Although the global fertilizer demand is experiencing slow growth, the demand for ammonia-based products are faring better. The largest growths are projected in South Asia, Latin America, and Southeast Asia. Significant increases in urea demand are expected to contribute to this growth, especially in Latin America and East Asia, including China, for its industrial sectors. Overall, these factors are expected to influence the demand for the global ammonia market.

Asia-Pacific to Dominate the Ammonia Market

In the Asia-Pacific region, China is the largest economy in terms of GDP. The country witnessed about 6.1% growth in its GDP during 2019, even after the trade disturbance caused due to its trade war with the United States. The economic growth rate of China in 2020 was initially expected to be moderate as compared to the previous year. However, due to the onset of COVID-19 in 2020, the economic growth of China is estimated to contract to some extent and is expected to witness recovery in 2021.

China accounts for approximately 7% of the overall agricultural acreage globally, thus feeding 22% of the world population. The country is the largest producer of various crops, including rice, cotton, potatoes, and others. Hence, the demand for ammonia, which is used as a fertilizer, is rapidly increasing owing to the large-scale agricultural activities in the country. The agricultural sector in the country is expected to grow for various reasons, as China’s urban consumers have the intent to eat more freshly produced and processed fruits, vegetables, juices, etc., and the demand for freshly produced food items may continue to grow, due to population shifts from rural areas to the cities. China has the largest agricultural output among all other countries in the world. In China, about 10% of its land is suitable for cultivation. The limited space for cultivation has led to serious food shortages in the past. China is planning to modernize and upgrade agriculture in the next 10 years. China's agriculture development will shift from increasing production to improving quality.

The pharmaceutical industry in China is one of the largest in the world. The country is involved in the production of generics, therapeutic medicines, active pharmaceutical ingredients, and traditional Chinese medicine. More than 90% of drugs registered in the country are generic. The pharmaceutical industry in China is expected to reach CNY 3 trillion in the coming years. Furthermore, the growing middle-class and aging society present in the country, rising incomes, and increasing urbanization due to which the pharmaceutical sales of the country are expected to reach up to USD 175 billion by 2022. The country has a large and diverse domestic drug industry, comprising around 5,000 manufacturers, of which many are of small- or medium-sized companies. This is expected to boost the growth of the usage of ammonia in the pharmaceutical industry. In 2016, the Chinese government promulgated Healthy China 2030, which is a blueprint that outlines its ongoing intents to prioritize health as a precondition for sustained social and economic development. Additionally, growing research on pharmaceuticals in the country is also augmenting the demand for ammonia during the forecast period.

Additionally, the demand for refrigeration has also been rapidly growing in the country. According to Warehouse in Cloud (WIC), cumulative cold storage logistics warehouse stock in China was recorded to be more than 6.65 million sq. m during 2019, i.e., about 2.15% of the total logistics warehouse market. The storage logistics has witnessed the positive impact of COVID-19, owing to the increase in the need to store perishable goods, frozen food, and fresh meat products for consumption, thereby increasing the need for ammonia to use in refrigeration, thereby driving its demand. This positive momentum in the different end-user industries, despite the temporary impact of COVID-19, has been catalyzing the market demand for ammonia and is expected to play a major role in promoting the growth for the market studied over the forecast period.

Competitive Landscape

The global ammonia market is fragmented, with the inclusion of international and local players in different regions. The major manufacturers in the market include CF Industries Holdings Inc., Yara, Nutrien Ltd, OCI Nitrogen, and Ostchem (Group DF), followed by other prominent players.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned

BASF SE
CASCALE SA
CF Industries Holdings Inc.
Chambal Fertilisers and Chemicals Ltd
CSBP Limited
EuroChem Group
Group DF (OSTCHEM)
Indian Farmers Fertiliser Cooperative Limited (IFFCO)
Koch Fertilizer LLC
Nutrien Ltd
OCI Nitrogen
PJSC Togliattiazot (TOAZ)
Qatar Fertiliser Company
Rashtriya Chemicals and Fertilizers Limited
SABIC
Yara

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