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The global ammonia market size was USD 67.01 billion in 2020 and is projected to grow from USD 71.98 billion in 2021 to USD 110.93 billion in 2028 at a CAGR of 6.4% during the 2021-2028 period. The sudden rise in CAGR is attributable to this market’s demand and growth returning to pre-pandemic levels once the pandemic is over. The impact of COVID-19 has been unprecedented and staggering, with NH3 witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a decline of 16.8% in 2020 as compared to the average year-on-year growth during 2017-2019.
Around 80% of NH3 produced is used in agriculture as fertilizers to help sustain food production for billions of people across the world. The product is also used as refrigerant gas and in the manufacturing of textiles, plastics, pharmaceuticals, dyes, pesticides, and other chemicals. It is also used in wastewater treatment, rubber, pulp & paper, food & beverages, and cold storage as a neutralizer, stabilizer, and nitrogen source, respectively. The increasing product utilization mainly in the fertilizer industry will bolster the overall business growth.
Negative Impacts on the Fertilizer Industry Supply Chain amid COVID-19 Pandemic to Stall Growth
The COVID-19 pandemic has had severe impacts on the fertilizer market supply chain in Asia Pacific. Crop manufacturers were affected by disruptions in international and local transport systems, delays in customs clearances, and clogged roads and ports, which inhibited their access to fertilizers. The dependency on oilseeds and grains production on these attributes has resulted in reduced production due to the inaccessibility of raw materials by farmers. The government of India, for instance, is closely monitoring the distribution and production of fertilizers to ensure that soil nutrients are easily available to farmers amid the coronavirus outbreak.
The negative impact of the coronavirus outbreak, labor shortage, and lockdown in China was limited to the first quarter of 2020, where the daily output declined by 20,000 tons to 125,000 tons. The production had been momentarily reduced by 80% to 90% in the first three months of 2020. As per the China Petrochemical Industry Association (CPCIA), after April 2020, fertilizer production returned to normal in China, leading to an increase in the demand for chemical fertilizers. Also, many countries have focused on food security issues and have taken actions to increase grain production.
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Demand for Ammonia to Increase as Scientists Focus on Reducing Greenhouse Gas
Ammonia is required to make fertilizers and is usually produced from nitrogen and hydrogen through the Haber-Bosch procedure. Its production using conventional fossil fuel-based processes is responsible for about 1.8% of the global CO2 emissions. Various researchers from the University of Illinois at Chicago and the University of Minnesota have been experimenting with a new electrolysis method that uses similar amounts of energy as that of the traditional method, thus producing an average of 2.8 tons of CO2 per ton of NH3. Moreover, using electricity derived from fossil fuels for the electrolysis process would result in 2.65 tons of CO2, whereas using renewables the process can have zero carbon emissions. In addition, the researchers are evaluating the possibility of using NH3 from the air rather than as a source of purified nitrogen gas. This would result in additional greenhouse gas (GHG) savings, as nitrogen gas needs to be purified and bottled.
Furthermore, companies continue to seek out new, low- or zero-carbon investment opportunities. Green hydrogen and NH3 are expected to be critical contributors to the world reaching net-zero carbon emissions by 2050. Various industry experts foresee that hydrogen will meet approximately 20% of the world’s energy needs by 2050. For instance, in October 2020, CF Industries announced that it would focus on green and low-carbon production, where NH3 is produced through a carbon-free process. To execute the process, the company has collaborated with technology partners and signed Memorandums of Understanding with Haldor Topsoe and ThyssenKrupp. CF Industries is also in discussion with global utilities and maritime transportation providers to use low-carbon ammonia directly as a fuel.
Rising Fertilizer Consumption and Increased Agricultural Production to Drive Market Growth
The growing global population and the increasing demand for food are likely to generate revenue in the fertilizer industry. The fertilizer industry plays a pivotal role in agricultural productivity and crop yield. Fertilizers provide the major nutrients including nitrogen, phosphorus, and potassium (NPK) that plants need to grow. The growing popularity of commercial agriculture globally is likely to drive the adoption of nitrogenous fertilizers. The market for these fertilizers is dependent upon the demand for oilseeds and grains crops that drives the overall fertilizer production.
Most of the ammonia produced is used in the agriculture industry as a source of nitrogen, which is vital for plant growth. The compound is utilized broadly in the fertilizer industry to produce solid materials such as urea, phosphate, ammonium nitrate, and sulfate. Additionally, ammonium phosphate is a fast-release fertilizer and can be used when planting new grass, when overseeding, when renovating the lawn, and for maintenance.
Exposure to High Concentrations of NH3 May Impact Human and Hinder Market Growth
Most people are exposed to NH3 from inhalation of vapors or gas. Since the product exists naturally and is present in cleaning solutions, people are very likely to get exposed to such sources. It interacts immediately upon contact with the eyes, skin, respiratory tract, and oral cavity. Exposure to low concentrations of ammonia in solutions or air may produce rapid eye or skin irritation. Higher concentrations may cause severe burns and injury. Any contact with concentrated solutions such as industrial cleaners may cause corrosive injuries including skin burns and permanent eye damage or blindness. Apart from these effects, exposure to high concentrations from swallowing solutions results in corrosive damage to the stomach, throat, and mouth.
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Fertilizer Segment May Account for Major Market Share from 2021 to 2028
On the basis of application, the market is segmented into fertilizers, textiles, refrigerant gases, pharmaceuticals, household & industrial cleaning, and others.
The fertilizers segment dominated the global market share in 2020 and expected to continue its dominance in the forthcoming years. NH3 is a building block for ammonium nitrate fertilizers, which release nitrogen, an important nutrient that is used for plant growth, including lawns and farm crops. To maintain healthy crops, farmers mostly rely on fertilizer to keep their soil productive. Fertilizers help increase levels of essential nutrients such as selenium, boron, and zinc in food crops. The growing population and the increasing demand for food will boost the demand for fertilizers for better crop production. The development of advanced farming techniques and the rising utilization of bio-fertilizers are the key factors inducing market growth.
Ammonium hydroxide, also known as household ammonia, is an active ingredient that is used in many household cleaning products and disinfectants. It is used to clean various surfaces including sinks, tubs, tiles, countertops, toilets, and others. These cleaning solutions are suitable for household use, where 5% to 10% NH3 is mixed with water.
Ammonia is an efficient and popular refrigerant gas due to its superior thermodynamic properties and low cost. An NH3-based refrigeration system costs 10% to 20% less than Chlorofluorocarbons (CFCs) and Hydrofluorocarbons (HFCs) due to the fact that the product has a lower density in the liquid phase. In addition, any leakage can be detected quickly due to its odor, hence any refrigerant loss is also lower.
Asia Pacific Ammonia Market Size, 2020 (USD Billion)
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The Asia Pacific market size stood at USD 27.41 billion in 2020 and the region is expected to dominate the ammonia market share during the forecast period. This is attributed to the increasing demand from the fertilizer industry in India and China. Rapid urbanization and growing populations have added to the demand for food, which will further accelerate fertilizer demand for better crop production. China is the largest fertilizer consumer and producer in the world. China’s soils are naturally phosphate deficient, which led to government policies to encourage phosphate use and production to boost overall yield.
Agriculture plays an important role in the economic development of agrarian India, with approximately 17% of the gross value added (GVA) and over 50% of the population depending on agricultural supply. India ranks third in the global food grain production after China and the United States mainly due to low crop productivity. With rising food demand and limited arable land, the long-term potential for the upsurge in fertilizer usage is reasonably high in India. The overall fertilizer consumption in India was 61.4 million tons in FY 2020.
The market in Europe may witness a significant growth rate in the forthcoming years. In Europe, NH3 production is mainly based on natural gas production, as a key raw material and steam methane reforming (SMR) as the major technology. The production of nitrogen fertilizer is energy-intensive. However, the European fertilizer industry has made improvements in the energy efficiency of mineral fertilizer production. Companies are investing in the present technology, which is likely to improve energy efficiency and have the lowest CO2 emissions. For instance, in February 2021, A.P. Møller-Maersk signed a project to build Europe’s largest production facility of carbon dioxide-free green NH3, in Esbjerg on the west coast of Denmark.
The U.S. held the highest share in the North America market in 2020 due to growth in the agriculture industry. According to the World Bank Development Indicators, the agricultural land in the U.S. was 44.36 % in 2018. The rise in government initiatives for the implementation of modern agriculture methods and advanced infrastructure has added to the high revenue of the North America market.
Increasing awareness regarding the importance of household hygiene may boost the demand for household cleaning products in the Latin American region. Latin American economic development, ample supply of natural gas, demand for fertilizers, and improvements in infrastructure helped to draw interest from various probable fertilizer investors.
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The Middle East is one of the largest producers of nitrogen fertilizers in the world. Saudi Arabia, Iran, and Qatar are the leading urea and NH3 producing countries in the Middle East region. Middle East suppliers serve the NH3 import markets in China, South Korea, India, and Taiwan, exporting over 3 million tons a year.
Companies to Invest in Research and Development for Commercializing New & Advanced Technologies
This market is highly competitive in nature with the presence of various key market players in the industry. Most of the key industrial participants are investing in R&D activities for innovating developed and new technologies. For instance, in August 2020, the Japanese shipping company NYK Line, shipbuilder Japan Marine United Corporation (JMU), and Nippon Kaiji Kyokai (ClassNK) signed a joint R&D agreement for the commercialization of an ammonia-fuelled ammonia gas carrier (AFAGC) that would use NH3 as the main fuel. The R&D is expected to contribute considerably to the de-carbonization of maritime and energy industries.
In addition, companies are acquiring, collaborating, increasing production capacity, opening new production plants, and launching new products to produce green NH3 with zero-emission and generate competition across the value chain.
An Infographic Representation of Ammonia Market
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The global ammonia market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, and applications. The report also offers insights into market trends and highlights vital industry developments. This report includes historical data & forecasts revenue growth at global, regional, and country levels, and analyzes the industry's latest market dynamics and opportunities. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years.
Value (USD Billion); Volume (Kilo Tons)
Application; and Region
Fortune Business Insights says that the global market size was USD 67.01 billion in 2020 and is projected to reach USD 110.93 billion by 2028.
In 2020, Asia Pacific stood at USD 27.41 billion.
Growing at a CAGR of 6.4%, the market will exhibit steady growth during the forecast period (2021-2028).
The fertilizer segment is expected to be the leading segment in this market during the forecast period.
The rise in fertilizer consumption and increased agricultural production are expected to drive the growth of the market.
Yara International, BASF SE, CF Industries Holdings, Inc., SABIC, and Nutrien Ltd. are the major players in the global market.
Asia Pacific dominated the market share in 2020.
This is applied as a marine fuel to reduce harmful emissions in the maritime industry, which is expected to drive its adoption.
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