Current nitrogen environment
Nitrogen supply and demand
Unlike potash, the nitrogen fertilizer market is fragmented with several players. That’s due to the abundant availability of input material such as natural gas or coal required for the production of nitrogen fertilizers.
In the above chart, we see that in 2017, ammonia capacity additions are expected to peak in 2017 with a net addition of 5 million metric tons, with most of the capacity additions taking place in the United States (XLB) and the Middle East. Ammonia capacity in China is expected to fall. That could translate to a net global capacity addition of 3% to 172 million metric tons in 2017.
Ammonia is the base nitrogen source, which is then upgraded to other nitrogen fertilizers such as urea, UAN (urea ammonium nitrate), and AN (ammonium nitrate). To learn more about nitrogen fertilizers, read our series Agricultural Fertilizer Industry: Your Comprehensive Overview.
So with the availability of abundant marginal capability, the growth in common nitrogen fertilizers such as urea gets easily captured. To put it in perspective, nitrogen demand is expected to rise 2%, which will be outpaced by a net nitrogen capacity addition of 3%.