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Developing Countries Will Execute Major Impact On The Mineral Fertilizer Market This Year

Oct 9, 2007
Emerging economies account for 45% and 66% of global ammonia output and consumption, respectively. The demand is likely to grow by 2.5% a year.

The demand for ammonia in industrially developed countries will remain stable, while capacity will continue to shrink due to the advancing exports from Asia, CEE, and South America. The ammonia production capacity will augment in Middle East, North Africa, and South America, which boast access to cheap gas.

The high demand for ammonia in Western Europe will persist.

According to recent forecasts, the world trade with ammonia and carbamide will grow. The fertilizer market is expected to remain tight due to strong demand. Low grain inventories in China and India continue to support fertiliser demand.

The ammonia market in China has better growth prospects than much of the rest of the world. Global markets are suffering from price falls as overcapacity damages the market. The Chinese market is protected to some extent by tariff barriers from price falls. In fact, China generally has the opposite problem in chemical products; its industry is not capable of keeping pace with the rapid growth in demand. Aammonia and carbamide production grew by 8% and 10% respectively. Ammonia output exceedes 30m tons.

The United States is a major ammonia importer. Sprayed ammonia solution accounts for 40% of all applied nitrogen fertilizers. The part of ammonia is used for the manufacture of diammophos (USA is a leading exporter of this fertilizer). In the USA, ammonia is also employed for technical purposes. High prices for natural gas in the United States continue to set high floor prices for ammonia and urea.

The main feature of the mineral fertilizer market in Russia is the low level of fertilizer consumption on the domestic level. Thus, the average level of fertilizer introduction into the soil is 90kg/ha in India, 130kg/ha in the USA, 300kg/ha in China, 550kg/ha in Netherlands. In Russia, this parameter does not exceed 8kg of active nutrient substances per 1 hectare. This is caused by the low purchasing ability of Russian agricultural entities. Nitrogen fertilizers account for 49% of the total fertilizer amount produced in Russia. Domestic consumption amounts for 1.3-1.5m tons of active nutrients.

World ammonia production capacity increases incrementally, by expansion of current production facilities or a few new plants coming onstream. By 2009, significant additional capacity are expected, much of which would be concentrated in the Middle East and Asia. By 2009, the International Fertilizer Industry Association estimated that world capacity would increase by about 11% and that Asia would have about 42% of the total, with about one-half of that capacity in China, about the same as in 2003. The Middle East, however, was expected to increase its share of world capacity to 11% in 2009 compared with 7% in 2003.

Ammonia serves as a feedstock for the production of nearly all nitrogen-containing substances. Ammonia is also used in large amounts in the Ostwald process for the synthesis of nitric acid; in the Solvay process it is applied for the synthesis of sodium carbonate; Ammonia is an intermediate product in the synthesis of numerous organic compounds used as dyes, drugs, and in plastics; and it is employed in various metallurgical processes.
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