and monitors and sensors that can facilitate the adjustment of application rates in real time. Policy is also critical. While fertiliser subsidies and trade policies are often applied with the good intentions of reducing food prices or improving the balance of trade, if poorly applied they have the potential to increase wasteful fertiliser application practices and consequently exacerbate negative environmental impacts. Reforming such policies can be a critical enabler of improved nutrient management.

Demand, supply and trade

Between 1990 and 2019,5 global ammonia demand increased broadly in line with the rise in the population. On a regional basis, true demand for the services provided by ammonia would be best measured through the components of food consumption and industrial products that have ammonia or ammonia-derived products as an input. Given that it is difficult to trace the consumption of these numerous products, apparent consumption – production, plus imports, less exports – is often used as an alternative indicator of broad trends in regional demand levels. Since apparent consumption constitutes demand by direct users of ammonia, such as fertiliser producers, farmers and downstream chemical industries, the indicator is influenced by growth in the relevant industries in the countries rather than directly correlated with population and economic development trends.

China is currently the largest ammonia producer, accounting for 29% of global production in 2019, followed by Russia (10%), the United States (9%), the Middle East (9%), the European Union (8%) and India (8%). Over the past three decades, the structure of the supply side has not changed drastically in market share terms

– the main producers in the global economy have remained the same, even as their order has shifted. In 1990 China was the largest producer (19%), followed by today’s members of the European Union (17%), the United States (13%), today’s Russia (10%), and India (7%), while the Middle East was only at 3%. The regions with the largest increase in apparent consumption of ammonia over the past two decades are the Middle East, Africa and Russia, with demand increases of approximately 140%, 110% and 80% respectively. In the meantime, demand roughly stagnated in the European Union, the United States and South America.

Apparent consumption and production of ammonia in 2019

Notes: The apparent consumption of a region is equal to its production plus imports minus exports. Source: Data from IFA.

China is the largest ammonia producer at 53.5 Mt in 2019 (29% of global production), and the largest consumer at 54.3 Mt.

Ammonia is traded around the world. In 2019 global trade was almost 20 Mt, or about 10% of production. Principal exporting countries and regions are Russia, Trinidad and Tobago and the Middle East, representing respectively 24%, 23% and 15% of global ammonia exports in 2019. Principal importing regions and countries are the European Union, India and the United States, at 24%, 14% and 13% of global imports respectively. Urea, the single largest derivative product of ammonia, saw an even greater share of its total production volume traded in global markets, at around 28% in 2019.

The main reason for the large volumes of trade in ammonia and its derivatives is the difference in cost of production in different regions of the world. Countries with abundant natural gas reserves and access to nearby centres of demand can produce ammonia at relatively low cost and may specialise in ammonia production as a product for export. For example, Trinidad and Tobago converts around 20%6 of the natural gas it produces locally into ammonia, rather than exporting the gas itself, increasing the value addition generated in the country. The country’s large ammonia industry relative to the size of its economy was also driven by a historical drive to build up a lower-cost offshore source to meet demand in the United States

– today, the United States remains its largest trading partner, importing 1.5 Mt of

ammonia per year from Trinidad and Tobago alone in 2019. The country exports another 3 Mt to more than 25 other countries. Other countries have also adopted an export-focused model, often as a way to make use of the natural gas that is produced in tandem with oil extraction, particularly in the Middle East and North Africa. Saudi Arabia’s production has more than doubled since 2005 (compared to a global increase in production of 26%), and Algeria’s production quadrupled over the same period. These countries now export around 30% and 40% of their production, respectively.

An important network of ports, pipelines and storage facilities dedicated to ammonia supports this trade. The United States alone has over 10 000 ammonia storage sites, many of which are connected to a pipeline network stretching more than 3 000 km and connecting the Gulf of Mexico to the Midwest. The longest ammonia pipeline in the world is the Tolyatti-Odessa pipeline, running from Russia to Ukraine, at a length of 2 471 km.

Before the 2008 financial crisis, the global volume of ammonia trade was growing at an average rate of 5% per year. In 2009 it decreased by 7%, despite overall production remaining stable between 2007 and 2009 at 150 Mt per year. Since 2010 the total volume of ammonia trade has fluctuated between 18 Mt and 20 Mt. Global ammonia production remained relatively robust during the Covid-19 pandemic, with 2020 production (185 Mt) estimated to be similar to that of 2019 (182 Mt). Overall food demand was not affected to the same degree as other aspects of the economy (such as international travel), despite more of it being consumed at home rather than in restaurants and other public spaces affected by lockdowns and other control measures.

Fertiliser prices stayed broadly stable since the 2008 financial crisis, although they have been rising since January 2021, reaching their highest levels since 2012 in July of this year. Capacity additions to respond to the continuing rise in demand are well underway, with around 9 Mt of output under development. Ammonia, urea and their derivatives can be transported and stored fairly cheaply and easily relative to some other large-volume industrial chemicals. Appropriate handling is imperative to ensure safety. Although these substances are not explosive in and of themselves, they can be brought to explosion when exposed to high temperatures or with the help of additional materials such as oxidisers, fuels and detonators.

The handling requirements vary depending on the particular product. Ammonium nitrate is classified as an oxidiser (Class 5.1) under the United Nations Recommendations on the Transport of Dangerous Goods Model Regulations, and