AMMONIA MARKET ANALYSIS

Global ammonia market size is expected to reach US$ 132.91 Bn by 2031, from US$ 82.76 Bn in 2023, exhibiting a compound annual growth rate (CAGR) of 6.1% during the forecast period (2024-2031).

Ammonia (NH3) is a compound that is composed of one nitrogen and three hydrogen atoms. It is usually found as a gas. It is colorless and highly soluble in water, and has a pungent odor. Ammonia is essential for many biological processes and serves as a precursor for amino acid and nucleotide synthesis. Ammonia is produced naturally through the breakdown of organic waste matter in the environment. It is used in the fertilizer, chemical, pharmaceutical, pulp and paper, mining, fiber, and plastics industries. The feedstock that is used for ammonia production is natural gas and fuel oil.

Market Regional Insights:

• Asia Pacific is expected to be the largest market for citric acid, accounting for 48% of the market share in 2023. The growth of this market in Asia Pacific is due to the increasing demand for ammonia in countries such as India and China.
• Europe is expected to be the second-largest market for citric acid, accounting for 21% of the market share in 2023. The growth of this market in Europe is due to the increasing demand for ammonia in countries such as France, Germany, the Netherlands, and Russia.
• North America is expected to be the third-largest market for citric acid, accounting for 16% of the market share in 2023.The growth of this market in North America is due to the increasing demand for ammonia in countries such as the U.S. and Canada.

Figure 1. Ammonia Market Share (%), By Region, 2023

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Analyst’s Views:

The market is driven by the increasing demand for ammonia from the agricultural and industrial sectors. Ammonia is widely used as a fertilizer for crop production and with growing population; food demand will continue to rise sustaining the fertilizer need. Recovery in economic activities post pandemic will further aid the agricultural sector growth. Major restraints for the market could be stringent environmental regulations around ammonia production and use. However, manufacturers are increasingly investing in carbon capture technologies to make production processes more sustainable and meet regulatory compliances. Transition towards green ammonia also opens new opportunities. Asia Pacific dominates the market and is expected to retain its position. Developing countries like India and China will be the fastest growing regional markets due to their massive agro-based economies and growing industrialization.

In conclusion, the market is expected for steady expansion driven by various macroeconomic and industry specific growth factors. While environmental regulations could impact production levels, focus on emission reduction and green technologies will help sustain demand over the long term. The growth outlook across regions may vary with Asia Pacific pacing ahead but opportunities exist worldwide.

Global Ammonia Market Drivers:

• Strong demand from agricultural sector: The market is being propelled by robust demand from the agricultural sector. Ammonia is a vital fertilizer that is widely used by farmers to increase crop yields and maximize agricultural output. According to data provided by the Food and Agriculture Organization of the United Nations, the worldwide fertilizer nutrient consumption increased from 0.10 Bn tons in 2000 to 0.19 Bn tons in 2019. Nitrogen-based fertilizers like ammonia and urea account for the majority of this rising nutrient demand. As the global population continues to grow and require more food, pressure on the agricultural industry to ramp up production also increases substantially. To meet the mounting requirement for cereals, grains, oilseeds, and other agricultural commodities, farmers worldwide have little choice but to depend heavily on chemical fertilizers to boost soil fertility and yields. Ammonia, being a primary nitrogen fertilizer, remains irreplaceable in helping cultivators boost productivity on their lands.
• Fertilizer production: The global demand for fertilizers has been increasing steadily over the past few decades due to the rising global population and shrinking arable land. Fertilizers play a crucial role in maximizing crop yields to feed the growing population. Among various fertilizers, ammonia has emerged as one of the major building blocks for the production of many nitrogen fertilizers such as urea, ammonium nitrate, and nitric acid. Ammonia is primarily used as a direct application fertilizer and as an important raw material in the manufacture of other nitrogen fertilizers. It helps in improving the nitrogen content of the soil which acts as a vital nutrient for most crops. According to data provided by the World Bank, agricultural land area declined from 5.1 Bn hectares in 1961 to 4.90 Bn hectares in 2019, indicating shrinking arable land. At the same time, the global population increased from 3.10 Bn to 7.70 Bn during the same period, putting immense pressure on food production. This has compelled farmers worldwide to use fertilizers more efficiently to maximize crop yields from available land.

Global Ammonia Market Opportunities:

• Growth in agricultural industry: The agricultural industry has shown tremendous growth potential globally which can drive opportunities for the ammonia market. Ammonia is widely used as a key nitrogen fertilizer for improving soil quality and increasing crop yields. With the growing global population and rising demand for food, focus on increasing farm outputs is surging. Several governments and organizations are putting significant efforts towards boosting agricultural production. For instance, in 2022, the United Nations has projected that the agricultural output needs to grow by 60% by 2050 to feed the increasing population. So, addressing the challenges of rising food demand, shrinking farmland, and climate change impacts requires significant boost to farm productivity from existing land. Ammonia fertilizers can play a central role here by supporting higher yields per hectare. Their rising use will thus provide continued opportunities for growth in this market going forward.
• Increasing demand for refrigerants: The use of refrigerants plays a big role in cooling and refrigeration applications across many industries such as the food, industrial, and commercial sectors. With rising global temperatures due to climate change, the demand for effective and efficient cooling solutions is increasing rapidly. Ammonia is widely used as a natural and cost-effective refrigerant and its applications are growing. It has been recognized by organizations like United Nations Environment Programme as one of the natural refrigerants of the future with zero ozone depletion potential. Compared to other synthetic refrigerants, ammonia provides better energy efficiency and lower operating costs for users over the lifetime of equipment. In 2021, according to the reports provided by the United Nations Environment Program, the global average temperatures in 2020 have been more than 1 degree Celsius above pre industrial levels. This has made cooling an indispensable part of daily lives and many industrial processes. The food processing and storage industry in particular relies heavily on ammonia for large-scale refrigeration needs to prevent spoilage. With global population expected to grow by 2 Bn in the next 30 years, the demand for food production and preservation is projected to increase substantially according to the United Nations World Population Prospects report 2022. This makes ammonia refrigeration the technology of choice for future-proof, sustainable, and cost-effective cooling in the food industry.

Global Ammonia Market Trends:

• Shift toward green ammonia: The shift toward green ammonia production is having a significant influence on the market. With the rising focus on decarbonization and the development of carbon-neutral technologies, green ammonia is emerging as a viable clean fuel alternative. Green ammonia is produced through the electrolysis of water and nitrogen from air with renewable electricity like solar or wind. This makes it a carbon-free fuel that can help reduce emissions from hard-to-abate sectors like shipping and heavy industries. Major market players across the ammonia supply chain are making strategic investments and forming partnerships to ramp up green ammonia capacity. For instance, fertilizer giant, Yara International, entered an agreement with Horisont Energi, clean energy company, in 2021, to jointly develop the world's first large-scale green ammonia project in Norway, which aims to produce 100,000 tons of carbon-free ammonia per year by 2028. Similarly, ENN Group, provides research and development for clean energy sources and Haldor Topsoe, company specializes in technologies aimed at reducing carbon emissions announced a cooperation deal in 2022 to establish a green ammonia production demonstration plant in China by using renewable power from solar and wind. The plant is projected to produce 5,000 tons of green ammonia annually.
• Technology advancements in production process: Advancements in production technologies are significantly impacting the market growth. Traditionally, ammonia has been manufactured through the energy-intensive Haber-Bosch process requiring high pressure and temperature. However, new technologies are developing that promise to reduce the carbon footprint of ammonia production. For example, several companies are exploring electrochemical and electro catalytic processes that use renewable electricity to split nitrogen and hydrogen directly from air and water. These methods use cheaper non-metallic catalysts and operate at ambient temperature and pressure. They could help ammonia manufacturers lower their electricity costs and transition to more sustainable power sources. According to the United Nations Economic Commission for Europe, these novel techniques have already achieved laboratory scale proof-of-concept and are being optimized for industrial deployment by 2030. The potential energy efficiencies from such emerging technologies are encouraging ammonia producers to invest in production capacity upgrades. Leading fertilizer firm, CF Industries, plans to incorporate technology developed by a fellow U.S.-based startup, GenH2 into its existing Haber-Bosch facilities by 2025.

Global Ammonia Market Restraints:

• Stringent environment regulations: Stringent environment regulations that are related to air pollution control are posing significant challenges for the growth of the market. Ammonia production is a highly energy-intensive process that relies on fossil fuels. It also releases large amounts of nitrogen oxides during manufacturing. Complying with new emissions caps set by regulatory agencies involves substantial capital investments in upgrades and modifications of manufacturing plants. Installation of additional pollution control equipment such as selective catalytic reduction systems for reducing nitrogen dioxide emissions requires sizable capital outlays. Many ammonia producers are struggling to meet these compliance costs, which is negatively impacting their competitive position and profit margins. Smaller producers who do not have adequate financial resources, finds it difficult to regularly upgrade their facilities as per changing standards. This leads to the closure of less efficient plants over time.
• Health hazards: One of the major factors restraining the growth of the market is health hazards that are associated with the use and exposure to ammonia. Ammonia is a highly toxic gas that can causes serious health issues if inhaled even in small quantities. Prolonged or repeated exposure to ammonia gas can severely irritate the skin, eyes, throat, and lungs. Symptoms range from eye and throat irritation to severe burns, blindness, and pulmonary edema depending on the concentration of ammonia and duration of exposure. These health hazards not only pose risks to factory workers and those directly handling ammonia but also people living in surrounding areas. Several accidents in the past involving ammonia leaks have caused numerous casualties and raised concerns about its safe use, transport, and storage. Such negative publicity and instances of toxic exposure undermine consumer confidence in ammonia. While it remains widely used as a fertilizer, its growth in other application areas is being obstructed by pressing health and safety issues.
• Counterbalance: To overcome this restraint, the key market players need to follow the government rules and regulations, which might increase the growth of the market.

Recent Developments:

New Product launches:

• In February 2024, FuelPositive Corporation is a pioneer in the development of Green Ammonia technology. FuelPositive Corporation is set to launch an on-farm green ammonia system that is designed for multiple applications including use as fertilizer for farming and fuel for grain drying.
• In January 2024, Syzygy Plasmonics announced the world's first light-powered reactor cell for industrial chemical reactions which met initial performance targets and is available for order in stacks that is designed to produce up to 5 tons of hydrogen per day. Syzygy has completed more than 1,500 hours of testing of its Rigel cell to produce hydrogen from ammonia. Testing of the first-of-a-kind 200 kg/d light-powered ammonia e-cracking cell began in late 2023 and is ongoing.

Mergers and Acquisition:

• In March 2022, Heroya Green Ammonia was launched as a co-operation between Yara International ASA, Aker Clean Hydrogen, and Statkraft, with an aim to decarbonize Yara International ASA’s ammonia plant at Heroya in Porsgrunn and for eliminating 800,000 tons of annual carbon dioxide emissions. Yara International ASA is a global crop nutrition company that produces and markets agricultural development and industrial products. The company's activities range from phosphate mining and ammonia production to building local market knowledge and developing customer relationships.

Figure 2. Ammonia Market Share (%), By Application, 2023

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Top Companies in Global Ammonia Market

• Yara International ASA
• BASF SE
• CF Industries Holdings, Inc.
• Nutrien Ltd.
• Potash Corporation of Saskatchewan Inc.
• Dangyang Huaqiang Chemical Co., Ltd.
• Shanxi Jinfeng Coal Chemical Co Ltd.
• GTS Chemical Holdings plc.
• Togliattiazot
• OCI Nitrogen B.V
• Agrium Inc.
• Sabic
• Koch Fertilizer, LLC

*Definition: Ammonia is an inorganic chemical compound composed of nitrogen and hydrogen with the formula NH3. It is a colorless gas with a distinct pungent smell and is lighter than air.