Originally published 30 June 2015 on IHS Engineering360.
Ammonia is the basic building block of nitrogen fertilizers, one of the most widely used agricultural fertilizers in the world.
Global population roughly doubled from approximately 3 billion in the early 1960s to around 6 billion at the turn of the 21st century. Between now and 2050, population is expected to grow by another 3 billion, according to the United Nations.
Feeding such a population will involve a combination of advancements, including relying on increased plant nutrition, introducing new technologies and cultivating more marginal land. As a result, ammonia’s role in food production is likely to grow in importance.
“Demand for fertilizers, the majority of which are ammonia based is driven by the need for food, which in turn is driven by the size and wealth of the population,” says Bala Suresh, senior consultant and director of IHS Chemical.
In recent years, a number of improvements have occurred in ammonia manufacturing processes that both increased energy efficiency and reduced operating costs. These production gains are being achieved through development and implementation of better process conditions and more efficient equipment design. In the past decade, ammonia process technologies have been commercialized worldwide by major licensors such as Haldor Topsøe, Ammonia Casale, Uhde and KBR.
Ammonia Market Overview
Ammonia production in the U.S. is set to increase significantly, mainly due to the abundant availability of cheaper shale-based natural gas raw material, says Suresh. Most of the announced capacity expansion projects are connected to downstream products such as urea and ammonium nitrate. Demand from these products also helps to drive ammonia production.
Crop prices also exert an understandably big impact fertilizer demand. “Crop price, like corn to fertilizer prices, has had a steady correlation,” says Suresh. In 2014, crop prices fell and farmers cut their application of fertilizers. In general, higher crop prices encourage farmers to apply more fertilizers to increase productivity and, consequently, increase their income. Lower crop prices tend to have an opposite effect.
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IHS Engineering360, June 2015.