Ammonia Market Anticipated to Grow at 6.9% CAGR Over Next Decade

Introduction

The global Ammonia Market is experiencing substantial growth, with its market size projected to reach USD 134.9 billion by 2032, up from USD 70.4 billion in 2023, reflecting a compound annual growth rate (CAGR) of 6.9% during the forecast period from 2023 to 2032. This growth can be attributed to several factors, including the rising demand for ammonia in agriculture, where it is a crucial component in fertilizers, and its expanding use in industrial applications such as refrigeration, water treatment, and the production of plastics and chemicals. However, the market faces challenges, including the environmental impact of ammonia production and the need for significant investments in cleaner technologies.

Recent developments in the market include a focus on low-carbon and clean ammonia production, exemplified by major projects from key players like Nutrien, BASF, and Yara International. Nutrien is evaluating a USD 2 billion investment to build the world’s largest clean ammonia facility in Louisiana, aiming to reduce CO2 emissions by 90%. BASF and Yara are also collaborating on a low-carbon blue ammonia project on the U.S. Gulf Coast, which aims to capture 95% of CO2 emissions from production. These initiatives highlight the industry’s shift towards sustainability and the development of innovative solutions to meet global decarbonization goals

Nutrien Ltd.: Announced plans to build the world’s largest clean ammonia production facility in Geismar, Louisiana. The facility, expected to start construction in 2024, aims to produce 1.2 million metric tonnes of clean ammonia annually, with at least a 90% reduction in CO2 emissions. The project involves an investment of approximately USD 2 billion and includes advanced carbon capture and sequestration technologies.

BASF SE Collaborating with Yara International to evaluate and construct a low-carbon blue ammonia production facility on the U.S. Gulf Coast. The plant, with a capacity of 1.2 to 1.4 million tons per year, will capture 95% of CO2 emissions, contributing significantly to BASF’s and Yara’s sustainability goals. The project aims to serve the growing demand for low-carbon ammonia in agriculture, shipping, and power production. CF Industries Holdings, Inc. In partnership with POSCO, is evaluating the development of green ammonia capacity at its Donaldsonville Complex, intending to produce 20,000 tons of green ammonia starting in 2024. This project underscores CF Industries’ commitment to clean energy and sustainable agricultural practices.

Yara International ASA: Engaged in multiple initiatives to promote clean ammonia. Yara is working with Enbridge on a low-carbon blue ammonia facility and has signed agreements to develop ammonia-fueled maritime vessels and establish ammonia bunkering terminals. These efforts are part of Yara’s broader strategy to lead in the clean ammonia market and support the hydrogen economy. SABIC continues to focus on sustainable ammonia production. The company has been investing in technologies to enhance energy efficiency and reduce CO2 emissions. Their efforts align with the broader industry trend towards green ammonia production, leveraging renewable energy sources like wind and solar power.

EuroChem Group is set to start operations at its new ammonia and urea plant in Kingisepp, Russia, in 2024. This facility, with a capital expenditure of $1.6 billion, will produce up to 1.1 million tonnes of ammonia and 1.4 million tonnes of urea annually. This expansion aims to bolster EuroChem’s production capacity and strengthen its position in the global ammonia market.

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Statistics

In 2022, the world exports of “Ammonia, anhydrous or in aqueous solution.” exceeded $11.2 billion (according to external trade statistics of 84 countries). It was $8.69 billion in the previous year (according to merchandise trade statistics of 82 countries).
About 90 percent of ammonia produced worldwide is used in fertilizer, to help sustain food production for billions of people around the world.
The objective of this research is to evaluate the susceptibility of stress corrosion cracking (SCC) to the effect of adding water in different concentrations of 0.5, 5, and 10% in ethanol-gasoline blends up to 95 and 85% of ethanol.
Approximately 88% of apparent domestic ammonia consumption was for fertilizer use, including anhydrous ammonia for direct application, urea, ammonium nitrates, ammonium phosphates, and other nitrogen compounds.
Ammonia was produced by 16 companies at 35 plants in 16 States in the United States during 2019; 2 additional plants were idle for the entire year. About 60% of the total U.S. ammonia production capacity was in Louisiana, Oklahoma, and Texas because of their large reserves of natural gas, the dominant domestic feedstock for ammonia. In 2019, U.S. producers operated at about 90% of rated capacity
Events, Trends, and Issues: The Henry Hub spot natural gas price ranged between $2.03 and $4.12 per million British thermal units for most of the year, with an average of about $2.60 per million British thermal units. Natural gas prices in 2019 were lower than those in 2018; a result of strong supply growth and warmer winter weather compared with that in 2018.
The U.S. Department of Energy, Energy Information Administration, projected that Henry Hub natural gas spot prices would average $2.52 per million British thermal units in 2020.
The weekly average Gulf Coast ammonia price was $259 per short ton at the beginning of 2019, which decreased to $200 per short ton in mid-April, and then increased to $235 per short ton in mid-August. The average ammonia price for 2019 was estimated to be $230 per short ton. In 2019, low natural gas prices resulted in lower ammonia prices. Global ammonia capacity is expected to increase by a total of 4% during the next 4 years.
Large corn plantings maintain the continued demand for nitrogen fertilizers. According to the U.S. Department of Agriculture, U.S. corn growers planted 37.1 million hectares of corn in the 2019 crop year
Since 2014 Poland’s production of Ammonia in Aqueous Solution was up 15.8% year on year totalising €17,040,529.85.
In 2016 Mexico was ranked number 4 in Agricultural Ammonia Emissions to 665,120.04 Metric Tons, moving from 41 in 2015.
We have our large-scale hydrogen project in Denmark that we’re maturing through H2 Energy Esbjerg, of which we are the majority owners. By Christmas last year we had invested about 200 million Danish Krones.
It would be fantastic if 5 percent of the global fleet was powered on low- or zero-emission fuels by 2030. So, depending on which fuel, it would probably mean the global fleet would need to burn 28 to 30 million tons of ammonia or methanol. Supplying the fuel will be a difficult task, but not impossible.
Founded in 1993, Trafigura is a leading supplier of commodities and one of the world’s largest charterers of vessels, responsible for more than 5,000 voyages each year with 30 owned vessels and almost 360 ships under management. The company is committed to reducing the carbon footprint of its shipping operations by 25 percent by 2030 (compared to the 2019 IMO baseline) with several initiatives to improve efficiency such as silicon hull paint, heat recovery systems, and propeller polishing.
In 2022, the world imports of “Ammonia in aqueous solution” exceeded $241 million (according to external trade statistics of 133 countries). It was $148 million in the previous year (according to merchandise trade statistics of 132 countries).
prices for ammonia and methanol fall within an approximate $550-$580 per tonne banding, with ammonia currently the higher priced of these two fuels.
LNG remains the cheapest of the tracked fuels but as the price of HSFO continues to head down to $200 per metric tonne, and below in some ports, the current differential between these two fuels is extremely narrow.
State-owned PT Pupuk Kaltim, North Bontang, East Kalimantan, operator of the Kaltim II fertilizer complex said the Kaltim II ammonia plant in 1993 produced 600,081 metric tons of ammonia, about 21% more than the design capacity. The plant in 1990 produced 548,320 tons of ammonia, the previous record and about 10% more than design capacity. The plant went on stream in 1984.

Emerging Trends

Green Ammonia Production: The drive towards sustainability has led to a significant focus on green ammonia production. Green ammonia is produced using renewable energy sources such as wind, solar, and hydropower, which significantly reduces the carbon footprint compared to traditional methods. This shift is crucial as the industry aims to align with global environmental goals and reduce greenhouse gas emissions. Companies like Yara International and OCI N.V. are leading the way by investing in green ammonia projects to provide cleaner solutions for agriculture, shipping, and power generation.

Technological Advancements: The ammonia production process is witnessing technological innovations aimed at improving efficiency and reducing costs. The traditional Haber-Bosch process is being complemented by emerging methods like electrolysis and biomass gasification. These technologies not only enhance production efficiency but also contribute to lower emissions. Additionally, digital technologies and artificial intelligence are being integrated for predictive maintenance and process optimization, further driving efficiency and cost reduction.

Ammonia as an Energy Carrier: Ammonia’s potential as a hydrogen carrier and its use in energy storage is gaining traction. Given its high energy density and ease of storage, ammonia is being explored as a viable option for transporting hydrogen. This application is particularly relevant for the development of the hydrogen economy, supporting various clean energy initiatives worldwide.

Increased Use in Precision Agriculture: The agricultural sector remains a dominant end-user of ammonia, primarily for fertilizers. The trend toward precision agriculture, which involves the use of technology to enhance crop yield and efficiency, is driving the demand for ammonia-based fertilizers. Precision farming techniques ensure optimal use of fertilizers, reducing waste and environmental impact while improving crop productivity

Expansion of Production Capacities: Major players in the ammonia market are investing heavily in expanding their production capacities to meet growing global demand. For instance, EuroChem’s new ammonia and urea plant in Russia, expected to start operations in 2024, will significantly increase its production capacity. Similarly, CF Industries Holdings Inc. acquired a major ammonia production facility, adding substantial capacity to its operations.

Strategic Partnerships and Collaborations: The ammonia market is witnessing a surge in strategic partnerships, mergers, and acquisitions aimed at enhancing market presence and capabilities. Collaborations between companies to develop and commercialize green ammonia production are particularly notable. These strategic moves are essential for companies to stay competitive and meet the increasing demand for sustainable ammonia solutions.

Government Policies and Subsidies: Supportive government policies and subsidies are playing a crucial role in driving the ammonia market. These incentives aim to enhance agricultural productivity and promote sustainable practices. For example, subsidies for green ammonia production and regulatory frameworks supporting clean energy initiatives are encouraging companies to invest in environmentally friendly technologies and production methods.

Use Cases

Fertilizer Production: Ammonia is predominantly used in the production of fertilizers, which accounts for approximately 80% of its global consumption. Ammonia is a key ingredient in the manufacture of ammonium nitrate, urea, and other nitrogenous fertilizers, essential for enhancing crop yields. The global population growth drives the demand for food, thereby increasing the need for efficient and high-yield fertilizers. For instance, global fertilizer consumption is projected to reach around 200 million tons by 2025, with ammonia playing a crucial role in meeting this demand.

Industrial Refrigeration: Ammonia is widely used as a refrigerant in industrial refrigeration systems due to its high energy efficiency and low environmental impact compared to synthetic refrigerants. It is particularly favored in food processing, cold storage, and large-scale refrigeration applications. The global industrial refrigeration market is expected to grow at a CAGR of 5.7% from 2021 to 2028, with ammonia-based systems being a significant segment of this market.

Chemical Manufacturing: Ammonia is a fundamental building block in the chemical industry, used in the production of various chemicals such as nitric acid, hydrazine, and amino acids. It is also essential in the synthesis of pharmaceuticals, plastics, and explosives. For example, ammonia is used to produce approximately 80% of the world’s nitric acid, which is a precursor for many chemicals and fertilizers.

Water Treatment: Ammonia is used in water treatment processes to chloraminate drinking water, which helps to disinfect and control harmful bacteria and pathogens. This application is crucial for ensuring safe drinking water and is widely adopted by municipal water treatment facilities. The global water treatment market is expected to grow significantly, driven by the increasing demand for clean water and stringent environmental regulations.

Textile Industry: In the textile industry, ammonia is used for various processes, including the treatment of cotton and synthetic fibers. It helps in enhancing the durability and quality of fabrics. The global textile market, which is projected to reach $1.23 trillion by 2025, utilizes ammonia in several of its processes to improve efficiency and product quality.

Fuel and Energy: Ammonia is gaining attention as a potential clean fuel and hydrogen carrier. It can be used directly as a fuel in internal combustion engines or gas turbines and as a means to store and transport hydrogen for use in fuel cells. The use of ammonia in this capacity is part of broader efforts to develop sustainable energy solutions and reduce carbon emissions. The market for ammonia as a fuel is expected to grow as technologies and infrastructure for green ammonia production and utilization are developed.

Mining Explosives: Ammonia is a key component in the production of ammonium nitrate fuel oil (ANFO), which is widely used as a blasting agent in mining and construction activities. The mining explosives market is projected to grow, driven by the expansion of mining activities and the demand for construction materials. Ammonia’s role in this market is critical for producing safe and effective explosives.

Key Players Analysis

Yara International ASA, through its Yara Clean Ammonia unit, focuses on producing low-carbon and green ammonia. Collaborating with partners like Enbridge, Yara is developing a significant blue ammonia project in Texas, expected to produce 1.2-1.4 million tons annually, with 95% of CO2 emissions captured and stored. This initiative supports decarbonization efforts in agriculture, shipping, and power production, reinforcing Yara’s commitment to sustainable ammonia production and reducing environmental impact.

BASF SE is actively involved in advancing sustainable ammonia production. The company collaborates with Yara on a joint study for a low-carbon blue ammonia facility on the U.S. Gulf Coast. This project aims to integrate carbon capture technologies to reduce CO2 emissions significantly during the ammonia production process. BASF’s involvement in such initiatives underscores its commitment to sustainability and innovation in the chemical industry, particularly in reducing the carbon footprint of ammonia production.

CF Industries Holdings, Inc. is a global leader in ammonia production, focusing on sustainability and clean energy. The company is actively working on decarbonizing its production network, with significant investments in green and low-carbon ammonia projects. For example, CF Industries is constructing North America’s first commercial-scale green ammonia capacity at its Donaldsonville Complex, expected to produce up to 20,000 tons annually starting in 2024. Additionally, CF Industries has acquired the Waggaman ammonia production facility, enhancing its production capabilities and aligning with its strategic focus on low-carbon solutions.

Nutrien Ltd. is a key player in the ammonia market, leveraging its extensive production and distribution network to supply ammonia for agricultural and industrial applications. The company is focused on sustainable practices, including the reduction of greenhouse gas emissions in its ammonia production processes. Nutrien’s initiatives include enhancing the efficiency of its production facilities and investing in technologies that support low-carbon ammonia. These efforts are part of Nutrien’s broader strategy to meet increasing global demand for sustainable agricultural products while supporting environmental goals.

SABIC is expanding its footprint in the ammonia sector by focusing on blue and green ammonia production. In 2022, SABIC Agri-Nutrients shipped South Korea the world’s first commercial batch of certified blue ammonia. This initiative is part of SABIC’s strategy to develop low-carbon solutions and align with global sustainability goals. The new facility in Jubail Industrial City will produce 1.2 million metric tonnes of blue ammonia annually, further solidifying SABIC’s leadership in the low-carbon ammonia market.

Qatar Petroleum, through its subsidiary Qatar Fertiliser Company (QAFCO), is significantly involved in ammonia production, focusing on both traditional and low-carbon methods. The company has been enhancing its production capabilities to meet the growing demand for ammonia in various applications, particularly in agriculture and industry. Their strategic initiatives include upgrading existing facilities and exploring new technologies to improve efficiency and sustainability in ammonia production.

EuroChem Group is set to expand its ammonia production capacity by launching a new plant in Kingisepp, Russia, expected to be operational by 2024. This facility will produce 1.1 million tonnes of ammonia annually. With a capital expenditure of $1.6 billion, the project aims to meet the increasing demand for ammonia in fertilizer production and other industrial applications, positioning EuroChem as a key player in the global ammonia market.

Koch Fertilizer, LLC is enhancing its ammonia production capacity through substantial investments in new technologies and facilities. The company focuses on improving the sustainability of its operations by incorporating advanced methods to reduce greenhouse gas emissions. Koch Fertilizer’s strategic initiatives include expanding production capabilities and enhancing operational efficiency to meet the growing global demand for ammonia-based fertilizers and industrial applications.

Praxair Technology, Inc. plays a significant role in the ammonia sector by supplying essential industrial gases like hydrogen and nitrogen to large-scale ammonia plants. A notable project is the Yara Freeport plant in Texas, where Praxair provides 170 million standard cubic feet of hydrogen and 2,000 tons of nitrogen daily. This supply supports the production of 750,000 metric tons of low-carbon ammonia annually, demonstrating Praxair’s commitment to sustainable industrial solutions through substantial investments and advanced pipeline systems.

China National Petroleum Corporation (CNPC) is actively engaged in the ammonia market, leveraging its extensive resources and infrastructure to enhance ammonia production capabilities. The company’s strategic initiatives focus on integrating ammonia production with its broader petrochemical and energy operations. This integration supports CNPC’s goal of meeting the increasing domestic demand for ammonia, driven by China’s vast agricultural sector and its need for efficient fertilizers to support food production and sustainability goals.

Rashtriya Chemicals and Fertilizers Limited (RCFL) is a key player in India’s ammonia market, focusing on the production of ammonia-based fertilizers to support the country’s agricultural industry. RCFL has been upgrading its facilities to increase production efficiency and capacity. Additionally, the company is investing in sustainable practices and technologies to reduce its environmental impact, aligning with national goals to enhance food security and promote eco-friendly agricultural inputs.

Conclusion

The ammonia market is poised for significant growth driven by technological advancements, sustainable practices, and increasing global demand. Innovations such as green ammonia production, which utilizes renewable energy sources, are transforming the industry by reducing carbon emissions and aligning with global sustainability goals. The agricultural sector remains a major driver, with ammonia-based fertilizers playing a crucial role in enhancing crop yields to meet the food demands of a growing population.

Additionally, strategic collaborations and investments in advanced production technologies are bolstering market expansion. As the market evolves, the emphasis on environmentally friendly solutions and efficient production processes will continue to shape its trajectory, offering robust opportunities for stakeholders.

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