IndexBox has just published a new report: ‘World – Anhydrous Ammonia – Market Analysis, Forecast, Size, Trends, and Insights’. Here is a summary of the report’s key findings.
Ammonia constitutes one of the world’s basic chemical products widely important for its use as a raw material for the production of mineral fertilizers, nitric acid, explosives, and polymers. Agricultural fertilizers account for near 80% of the world’s ammonia use.
Due to the continuous growth of the world’s population and a stable increase in world GDP, the need for crop-based foods and animal feed is rising, which is a key fundamental factor in the growth of demand for ammonia.
The global ammonia market stood at $90.7B, according to IndexBox estimates. Global consumption peaked at $100.7B in 2013; however, from 2014 to 2019, consumption remained at a lower figure. In physical terms, global ammonia consumption was estimated at approximately 182M tonnes in 2019, declining slightly against the previous year.
In early 2020, the global economy entered a period of the crisis caused by the outbreak of the COVID-19 pandemic. The quarantine measures that put on halt production and transport activity disrupted economic growth heavily throughout the world. According to World Bank forecasts, despite the gradual relaxing of restrictive measures and unprecedented government support in countries that faced the pandemic in early 2020, the annual decline of global GDP could amount to -4.3%, which is the deepest global recession being seen over the past eight decades.
However, the ammonia market remains relatively resilient to the pandemic. In the second quarter of 2020, there was a slight drop in demand from mineral fertilizer producers due to the introduced isolation regime and a shortage of labor, many regions missed handling the spring sowing season. After the lifting of restrictive measures, the demand for ammonia recovered, and companies adapted to new conditions of supply chains and sales channels.
China (48M tonnes) remains the largest ammonia-consuming country worldwide, accounting for 27% of the total volume. Moreover, ammonia consumption in China exceeded the figures recorded by the second-largest consumer, the U.S. (21M tonnes), twofold. India (19M tonnes) ranked third in terms of total consumption with a 10% share.
In China, ammonia consumption contracted by an average annual rate of -2.4% over the period from 2012-2019. The remaining consuming countries recorded the following average annual rates of consumption growth: the U.S. (+2.7% per year) and India (+2.6% per year).
In value terms, China ($33.4B) led the market, alone. The second position in the ranking was occupied by India ($12.1B). It was followed by the U.S.
With the pandemic’s impact, it is expected that in 2020, global consumption of ammonia should remain nearly unchanged against 2019. In the medium term, as the global economy gets back to work, the market will start recovering, driven by major fundamentals that existed before the crisis. Overall, market performance is forecast to pursue a positive trend over the next decade, expanding with an anticipated CAGR of +0.4% for the period from 2019 to 2030, which is projected to bring the market volume to 191 M tonnes by the end of 2030 (IndexBox estimates).
New areas of industrial use of ammonia are emerging, which are becoming increasingly relevant in the context of increased attention to environmental protection and reduction of greenhouse gas emissions. Standard industrial synthesis of ammonia from nitrogen and hydrogen from methane produces more carbon dioxide than many other chemical industries. The largest producers are developing the production of “green ammonia” and positioning it as a more environmentally friendly product in comparison with conventional ammonia.
Another promising opportunity for the use of ammonia is its use as a carbon-free fuel. Compared to hydrogen, ammonia has the advantage of being easier to transport and store because a large amount of energy could be stored in smaller volumes of a substance.
Given this background, Japan is considering replacing coal fuel for power plants with ammonia, and it is also emerging as a marine fuel. Ammonia as an energy source complies with the new IMO 2020 requirements that limit the sulfur content in bunker fuel and will reduce CO2 emissions to target environmental indicators.
Increased attention to the regulation of carbon emissions in the EU and large-scale measures under the Green Deal action plan, as well as the return of the United States to the Paris Climate Agreement, should contribute to the search for alternative fuels, including ammonia, and transforming energy markets. If promising technologies of ammonia fuel become widespread in the industry, the growth of production of low-carbon fuel may become a new driver of the world ammonia market in the medium and long term.
The changes in the ‘green’ legislation could potentially lead to market transformations in the energy sector. In connection with the announcement by the European Union of plans to introduce a cross-border carbon tax, many countries that do not produce “green” ammonia may lose their positions in the European sales market. In the medium term, this situation will force producers to restructure their processes towards obtaining “green” ammonia and may lead to significant shifts in the structure of the global ammonia value chain.
Source: IndexBox AI Platform
