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The global urea market size was valued at USD 107.28 billion in 2021 and is projected to grow from USD 129.52 billion in 2022 to USD 150.61 billion by 2029, exhibiting a CAGR of 2.2% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with urea experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of 2.3% in 2020 as compared to 2019.
Commercially, ammonium carbamate is produced by reacting ammonia with carbon dioxide. Further, ammonium carbamate is decomposed to yield urea (carbamide) in solid form. As the product is enriched with nitrogen, it became a popular choice as a source of nitrogen in the fertilizer industry. Protein requirements in ruminant animals can be sufficiently met by feed grade. Owing to its excellent chemical characteristics, it is widely accepted in many industrial applications. Thus, versatile usage is expected to show a positive market outlook in the near future.
Declined Demand from Industries Negatively Affected Market Growth During 2020-2021
Carbamide is largely consumed in agriculture and animal feed applications. During the progression of the coronavirus pandemic, the lockdown critically challenged the trade of carbamide & related products across the world. However, the agriculture industry and animal feed sector showcased resilience as compared to the industrial sector. Potential industrial applications, such as chemical manufacturing, fuel additives, and resins, are strongly impacted due to irregularities in production. Shortage in raw materials and working people further challenged the urea market growth. However, in 2021, major consumers, such as the U.S., China, India, and others, slowly revamped industrial operations. Thus, the demand for technical-grade products slowly recovered. Owing to the further rise in energy prices, manufacturing costs increased in the last quarter of 2021. The prices went up sharply in the first quarter of 2022. Therefore, despite the slow recovery in consumed volume, the overall revenues generated were strongly increased.
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Technological Developments in Manufacturing Process to Aid Market Growth
Developments in production technologies such as Blue Urea present lucrative opportunities for market growth. This innovative product is produced under attenuated reaction conditions. This is achieved by using water, nitrogen, and carbon dioxide as raw materials. The energy used in the production process is obtained from renewable sources such as wind turbines located at a point of use or closer to agricultural land. During the reaction, hydrogen is produced by the process of electrolysis. The equipment can be housed in a standardized ISO container at the point of use. This helps in the delocalization of production, eliminating costs and emissions associated with transportation. This technique also helps to overcome emissions of different pollutants associated with the conventional manufacturing process. Also, the composition of the product obtained by this technique is free of contaminants, making them ideal for use.
Growing Demand from Industrial Applications to Drive Market Growth
Recently, there has been a huge rise in demand for carbamide from the industrial sector owing to its wide range of industrial applications. It has the ability to trap different organic compounds due to its property of forming interpenetrating helices by forming hydrogen bonds. This property makes it a suitable product for the separation of the mixture and to be used in the production of aviation fuels & lubricating oils. It is also used in the separation of paraffin. In the automotive industry, the product is used to reduce nitrogen oxide pollutants from the combustion of fuel. For instance, BlueTec solutions inject the aqueous solution into the exhaust system. After decomposition, ammonia converts nitrogen oxide emissions into water and nitrogen in a catalytic converter.
Technical grade is used as raw material in the manufacturing of urea-formaldehyde resins, adhesives such as urea-melamine-formaldehyde used in marine plywood and stabilizers in nitrocellulose explosives. In the pharmaceutical and cosmetics industry, it finds a wide range of applications. It serves as a source of hydrogen in rehydration products as well as subsequent power generation in fuel cells. It is a key raw material for manufacturing different drugs and chemical intermediates such as an ingredient in hair removers, hair conditioners, bath oils, skin softeners, lotions, disinfectants, and others. Other commercial applications include de-icer by airports, ingredients of yeast nutrients, flavor-enhancing additives for cigarettes, protein denaturants, and radioactive detectors in different diagnostic tests.
Rising Awareness about Organic Farming to Hinder Market
Prices of urea are increasing with increasing prices of oil and gas across the globe. This has resulted in an increase in the import bill of the countries dependent on the import of oil & gas, such as India, Brazil, Japan, Australia, and others, for production. Carbamide is the major fertilizer used in agriculture, separately as well as in combination with other fertilizers. It has resulted in increased cost of input for agriculture and increased emissions of ammonia and carbon dioxide. Ammonia released during application is harmful to human health as well as the ecosystem, and carbon dioxide is a potent greenhouse gas.
This has resulted in different governments across the world promoting different types of alternative farming practices such as organic farming and zero-budget natural farming. For instance, the Government of India is promoting different types of chemical-free farming systems under the dedicated scheme of Paramparagat Krishi Vikas Yojana (PKVY). Such initiatives from major consumers may hinder the market growth.
Fertilizer Grade to Lead Market Due to Extensive Adoption as Key Nitrogen Fertilizer
In 2021, the fertilizer grade segment held the largest share of the market and was expected to retain its position during the foreseeable future. It can be attributed to the increased use of fertilizers to enhance the production of crops. Recent decades have seen a huge rise in population, especially in developing countries in Asia and Africa. This has resulted in a rise in food demand. Also, this has increased the burden on limited agricultural land, resulting in increased use of fertilizers.
Increased industrialization has led to a decrease in grazing and pasture land, creating the need for alternative feed sources for animals. This has led to an increase in feed-grade product demand to supplement the diet of cattle and other ruminants. Cattles and ruminants convert urea into protein by digestion through bacterial action. It helps in maximizing the feed benefits, especially in the dry season.
The technical grade segment is growing at the fastest rate on the backdrop of increasing industrialization throughout the world. Major technical applications include glue and resins, plastic manufacturing, metal treatment, wood industry, tanneries, construction, and civil engineering. Also, technical-grade urea has a wide range of applications in health and beauty products.
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Owing to Higher Demand, the Agriculture Segment Accounts for Largest Revenue Share
In 2021, the agriculture segment held the largest share of the global market. It can be attributed to the large-scale use of carbamide as fertilizers to increase crop yield. Granular and prilled forms make it easy for transportation and handling in agriculture applications. It is applied to the soil surface or mixed with soil. It can be applied manually or mechanically. It is used before the plantation as well as after the plantation as per the requirements of the soil and crop.
The shortage of protein feeds and the high cost of supplementing proteins are making carbamide an alternative supplement for animal feed. Feed grade product comes with around 45% of nitrogen content, which is equivalent to 281% of crude protein. Decreased availability of pasture land and increasing prices of conventional animal feed are expected to push the growth of the animal feed segment.
The chemical synthesis segment is projected to indicate the fastest growth in the market. Technical grade products are widely used to prepare resins, pharmaceutical & cosmetics formulations, and other specialty chemicals. Other applications include manufacturing of diesel exhaust fluid, research, and development, as de-icing agent, flame-proofing agent, component of cloud seeding agent, plankton nutrient in ocean nourishment experiments, solubility enhancer, as a hydrogen source, separation of paraffin, and others. This wide range of applications in different end-use industries is driving the growth of the others segment.
Asia Pacific Urea Market Size, 2021 (USD Billion)
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The market size of Asia Pacific region was USD 71.05 billion in 2021. There is a huge rise in population in the region, resulting in increased food demand. This has caused an increase in demand for fertilizers to increase crop yield per hectare of agricultural land. Also, increasing use in the animal feed industry is pushing the demand for feed-grade products in the region. All these factors have led to a rise in carbamide production to meet increasing demand. The high share of the region in the global market is attributed to the highest production and consumption in China, followed by India, ASEAN, Japan, and South Korea. Moreover, local governments in the region are assisting farmers by providing subsidies to purchase fertilizers to increase food grain production. For instance, the Government of India announced a subsidy of around USD 269.4 billion in the financial year 2022-2023.
Europe considerably imports carbamide from Asia and the Middle East. Backed by strict regulations, technological developments in the product are expected to reduce carbon emissions as well as decrease input costs. The developed automotive sector in the region is propelling the market in the region. It is due to increasing use for reducing nitrogen oxide pollutants from fuel combustion. Increasing regulations for limiting greenhouse gases are expected to surge the demand from the automotive sector in the region.
North America is expected to be a steadily growing market during the urea industry forecast period. The growth in this region is mainly attributed to the higher demand for agriculture as well as the rising demand for industrial applications. Farmers use nitrogenous fertilizers to get a higher yield of corn, canola, wheat, and others. This demand is expected to rise in the foreseeable future, owing to increasing food demand in the region.
Despite the sufficient availability of raw materials, Latin America imports a considerable portion of its total need. For instance, in February 2022, the Brazilian government signed an agreement with the Iranian National Petrochemical Company to triple its shipments from Iran to meet rising demand in the country. Hence, there is considerable scope to expand and establish new manufacturing facilities in Latin America.
The Middle East is one of the key manufacturers due to the presence of large-scale producers in the region. There is rising demand from agriculture and availability of raw materials at comparatively lower prices. This has led to the expansion and establishment of new manufacturing facilities in the region. GCC significantly contributed to the growth of the market in the region owing to the developing chemical and automotive industries.
Leading Entities to Aim for Production Expansion to Meet Rising Demand
The presence of key players in this market is fairly fragmented in terms of production and supply chains. Largest producers, such as SABIC, Yara International, Nutrien, and others, are aiming to expand their production as well as distribution abilities through acquisition and merger strategies. As this key market is strongly influenced by consumer-specific needs, these manufacturers are focused on ensuring continuous supply in the market to obtain a competitive edge over competitors. Local players are also engaging in developing resilient distribution networks to compete against large players.
An Infographic Representation of Urea Market
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The market report provides qualitative and quantitative insights on the urea market share, size, growth rate, and trend analysis by different segments. Along with this, the research report provides an elaborative analysis of the market dynamics and competitive landscape. Various key insights presented in this market analysis report are Porter’s five forces, recent industry developments, regulatory scenarios, and key industry trends. The report also highlights the competitive landscape between key players operating in this market.
Value (USD Billion), Volume (Million Tons)
By Grade, Application, and Geography
Fortune Business Insights says that the market was valued at USD 107.28 billion in 2021 and is expected to reach USD 150.61 billion by 2029.
Growing at a CAGR of 2.2%, the market will exhibit considerable growth in the forecast period.
The agriculture segment dominated the market in 2021.
Increasing consumption from chemical industries shall drive the growth of the market.
Asia Pacific currently holds the highest market share in terms of market revenue.
SABIC, Yara International, and Nutrien AG are the key players in the market and have adopted strategies, such as acquisition and capacity expansion, for their growth in the market.
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