Introduction
The phenomenal growth of urea production since the 1960’s without any serious competitive threat, reflects the very essential role it serves in the agriculture sector. In support of this success, the development of its production technology had attracted fundamental researches, and efficiency in production has benefited from such efforts. The fertilizer sector is driven by the world’s ever growing population’s need for food and fibres. Probably three major developments have moulded its present shape : the Green Revolution of the 1960’s, the oil crisis of 1973/74 and the collapse of agricultural production in the Former Soviet Union and Central Europe. It is likely that the implementation of the Uruguay Round Agreement on Agriculture now administrated under the WTO will also
significantly impact the fertilizer sector. bThe Green Revolution prepared the stage for the fertilizer industry by breeding high-yielding crops that can benefit from nutrient inputs; the oil crisis shifted the emphasis to efficient plants and competitive energy sources while the collapse of the centrally planned economies in Europe helped to channel the agricultural efforts to the developing countries. At the onset of the first millennium, global population was around 200 million. It reached the first billion in 1850 and thereafter the pace of growth quickened. From that milestone, it took 80 years for the population to double and then only 45 years to re-double. The sixth billion
mark was reached in October 1999

AD1 500 1000 1500 2000 Billions 6 World Population Growth AD 1 to 1999 Experts differ widely in their prognosis on the timing and size the global population would peak : from a low estimate of 9 billion by 2070 to a medium of 12.5 billion and a high of 28 billion, with both the latter marks by 2150, before stabilizing. Such projections are of utmost relevance to the fertilizer industry due to the intimate linkage between food production and population growth. Million tonnes nutrients nutrients : nitrogen, phosphate and potash. There were two key set-backs during the period : 1974, as a result of the oil crisis and 1989-1993 due to the collapse in consumption in the Former Soviet Union and Central Europe. There is a major shift in consumption as well : in 1961, the developed countries accounted for 87% of the off-take. Currently, their share is only 38% and diminishing. At their peak in 1987, the developed countries consumed nearly 84 M.t. nutrients while their average over the last 5 years was some 52 M.t. nutrients. Some 70 million tonnes a year in that market have disappeared. It is indeed of interest to note that in 1961, all three major nutrients were around similar levels in off-take. While current nitrogen consumption has gained by almost 8-fold, that of phosphate and potash are only twice and double the 1961 level respectively.

Table 1 : Major Fertilizer Products Consumed : 1998
(000t product)
1. Urea 86,130
2. NPK/Blends 43,180
3. ABC 42,000
4. AN/CAN 35,420
5. SSP 34,880
6. DAP/MAP 28,720
7. MOP 22,360
8. Nitrogen solutions 13,150
9. Ammonium sulphate 12,580
10. Ammonia D.A. 5,490
11. TSP 4,750
12. Others 10,000
TOTAL 338,660
Table 1 shows the major fertilizer products consumed in 1998. Urea is by far the most widely
used product. Together with other straight nitrogen : ammonium bicarbonate and ammonium
nitrate/CAN, they make up nearly half the total market share.
Nitrogenous Fertilizers
The sharp volatility in ammonia and urea prices at the beginning of this year shows the tight
bondage between the prices of natural gas and nitrogenous fertilizers. As a result of a sharp
hike in the gas price from around US $ 2 to over US $ 9 per mmBTU, there were temporary
shutdowns in a number of ammonia plants in USA and this immediately caused a serious
supply gap. Currently, about three-quarters of the world’s ammonia production is derived
from natural gas. Of the balance, 16% is obtained from coal, mainly among the 800 small
ABC plants scattered all over China. Fuel oils and naphtha have a limited share and these
plants are mostly confined to India. Ammonium sulphate is the significant nitrogenous
fertilizer that is not directly derived from ammonia. It is a by-product of the caprolactam and
acrylonitrite manufacture.
• Ammonia supply
Ammonia supply holds the key to the understanding of nitrogenous fertilizers supply. Some
90% of the ammonia produced are channelled into the fertilizer sector, while the remainder
are used as a base for other synthetic products : plastics, refrigerants and explosives.
Ammonia production continues to grow from strength to strength despite a slow-down in
demand for nitrogenous fertilizers during the last few years (Table2).
Table 2 : World Ammonia Production
(000t N)
Tonnage
19994 93,339
1995 99,927
1996 104,567
1997 102,594
1998 103,238
1999 106,044
2000 107,797 est.
A breakdown in ammonia production by region for 2000 is shown in Table 3.
Table 3 : Ammonia Production and Export by Region : 2000
(000t N)
Region Total Tonnage % share Export tonnage % share
Socialist Asia 27,762 25.8 0 0
Rest of Asia 19,777 18.3 943 7.4
North America 16,125 15.0 1,550 12.2
East Europe/C. Asia 14,498 13.4 3,815 30.0
West Europe 10,894 10.1 1,528 12.0
Middle East 7,340 6.8 1,298 10.2
Latin America 4,981 4.6 2,880 22.7
Central Europe 4,664 4.3 387 3.0
Africa 1,076 1.0 312 2.5
Oceania 681 0.6 0 0
TOTAL 107,797 - 12,712 -
The bulk of the ammonia produced in Asia is for home consumption, while the exportoriented
countries are Trinidad, Ukraine, Russia, Qatar and several others from the gas-rich
regions (Table 4). Trade in ammonia is far more restrictive than any other fertilizers since
special terminals and storage facilities are necessary.
Table 4 : Major Ammonia Producers & Exporters : 2000
(000t N)
Country Tonnage % Global % Exported
China 27,650 25.6 0
USA 11,995 11.1 5.5
India 10,148 9.4 0
Russia 8,735 8.1 28.0
Canada 4,130 3.8 21.5
Indonesia 4,011 3.7 19.6
Ukraine 3,577 3.3 33.8
Trinidad 2,686 2.5 90.1
Netherlands 2,543 2.4 23.1
Country Tonnage % Global % Exported
Germany 2,473 2.3 12.7
Pakistan 1,884 1.7 0
Poland 1,862 1.7 10.7
Saudi Arabia 1,743 1.6 23.5
Egypt 1,511 1.4 4.4
Japan 1,405 1.3 0
Bangladesh 1,255 1.2 10.2
Qatar 1,097 1.0 28.0
Despite a very large tonnage that is produced, USA continues to rely on ammonia imports to
support its production of ammonium phosphate in which it is the leading exporter (Table 5).
Sizable quantities are imported by India and the leading industrialised countries in West
Europe and Asia.
Table 5 : Major Ammonia Importers : 2000
(000t N)
Tonnage
USA 4,215
India 1,105
Korea 654
Turkey 600
France 513
Spain 495
Taiwan 411
Belgium 396
Morocco 321
Italy 288
Finland 266
Norway 264
Sweden 246
UK 236
Denmark 216
• Urea supply
In 2000, a total of 55 countries produced 107.4 M.t. of urea (Table 6). The 10 biggest
producers are located either in the highly populous rice growing areas in Asia or where
natural gas is readily available. The global production and consumption pattern since 1973 is
shown in Figure 3.
6
Table 6 : Urea Producers : 2000
Production Range # Countries Total Production
(000t urea)
% Share
Up to 0.5 M.t. 27 5,415 5.0
> 0.5 M.t. to 1.0 M.t. 10 6,913 6.4
> 1.0 M.t. to 2 M.t. 8 10,893 10.1
Bangladesh 2,388 2.2
Saudi Arabia 2,638 2.5
Ukraine 3,128 2.9
Pakistan 3,535 3.3
Russia 4,332 4.0
Canada 4,530 4.2
Indonesia 6,319 5.9
USA 6,935 6.5
India 19,697 18.3
China 30,700 28.6
> 2 M.t.
TOTAL 107,423
From the trend, it is obvious that setbacks in either production or consumption are extremely
rare events. The reason for its resilience is that urea trends to cannibalise other straight
nitrogenous fertilizers, AN, CAN, AS and even ammonium phosphates under difficult market
conditions.

Asia-Soc
Oceania Total
Granular

TOTAL 91,831 110,061 128,873 161,097
GRANULAR n.a 15,860 24,350 34,428
% Share Granular n.a 14.4 18.9 21.4
% Capacity utilisation 82.4 84.7 83.3 -
n.a. : data not available
Table 7 provides a detailed summary of the urea capacities by region, including that of
granular urea. During the last decade, the greatest growth took place in China in which nearly
20 M.t. of new capacities were added; the rest of Asia also put up an impressive 11 M.t. The
Middle East region together with Latin America are planning to accelerate the pace of
expansion over the next 5 years. West Europe is the only region that is cutting back on
capacities.
Capacity utilisation follows closely to market demand. The 1995/96 period was particularly
buoyant for the agricultural commodities when cereal prices reached an all time record.
Current conditions are fairly muted.
• Granular urea production
The granulation technology had been around for more than 40 years. It started with drum
granulation in the sixties. By the seventies, penetration of this technology was already
widespread in North America due to the strong demand for blending and mechanical
application. The development of fluidised bed granulation in the 1980’s provided another
impetus to granular urea production.
Statistics on granular urea capacity were started quite recently. To date, there is no separate
statistical data on granular urea consumption and trade. North America currently leads the
8
world in granular urea capacities followed by the export-orientated Middle East region. Over
the next 5 years, the share of granular urea against the prills will continue to increase.
Aggressive expansion is planned in the Middle East and Latin America and to a lesser extent
in Asia. In the Middle East, the new capacities would be from Saudi Arabia (2 x 600 Kt),
Oman (830 Kt), Iran (660 Kt) and Kuwait (585 Kt). The Chinese are likely to add some 1.5
M.t. of granular capacity by 2005. For the rest of Asia, Indonesia plans to bring 1.14 M.t. onstream
on or before 2005, while Bangladesh would upgrade an existing plant from 645 Kt to
840 Kt. The Plenty River project in Australia for 726 Kt capacity is planned to come onstream
only after 2005. Except for the countries with a sizable domestic market, the
production from the new capacities would be geared almost entirely for export. No granular
plant has been on the drawing board for Central and East Europe despite their large export of
prills.
• Urea trade
Over 90% of the urea produced is used as fertilizers. Industrial uses include the manufacture
of adhesives, resins, dyes, feed supplements for livestocks, pharmaceuticals and many other
specialised products.
About 25% of urea produced is exported. Although, 42 out of 55 producing countries sell their
product abroad, 12 of the largest players make up three quarters of the total exports
(Table 8).
Table 8 : Urea Exporters : 2000
(000t urea)
Export # Countries Total Volume % Share
Up to 250 Kt 19 1,220 4.7
250 Kt to 500 Kt 5 1,656 6.3
500 Kt to 750 Kt 7 4,037 15.4
750 Kt to 1 M.t. 5* 4,411 16.8
> 1M.t. Qatar
Canada
Indonesia
Saudi Arabia
Ukraine
Russia
1,639

TOTAL 26,192
* Malaysia : 867 Kt.
The trade is complex since some 120 countries import varying quantities of tonnages
(Table 9).
9
Table 9 : Urea Importers : 2000
(000t urea)
Import # Countries Total Tonnage % Share
Up to 250 Kt 91 3,931 15.0
250 Kt to 500 Kt 11 3,815 14.6
500 Kt to 1 M.t. 6 3,835 14.6
> 1M.t. Mexico
Italy
Turkey
Thailand
Australia
Brazil
Vietnam
USA
1,222
TOTAL 26,192
Among the large users, China has been absent from the market since 1998 due to import
ban instituted a year previously. In 1996, it imported over 6 million tonnes. India also took a
dip in import from around 800 Kt to less than 175 Kt last year. Meanwhile, USA has taken up
the slack and increased its import by nearly 1.5 M.t. over the last two years. West Europe
also took advantage of the low prices by increasing its import by more than 1.3 M.t. over the
previous two years. Latin America, a region with vast potential for growth, had also increased
its import lately.
Urea Demand
The demand for urea is ultimately entwined with the need for fertilizers as a whole. As the
population grows, the pressure to provide adequate food and fibres intensifies. With
continuous improvements in agricultural production, cereal production, for example, has
clearly outpaced population growth. (Table 10).
Table 10 : Cereal Production vs Population Growth
1930 1975 1999 1999 vs 1930
% change
Population 2 billion 4 billion 6 billion + 200
Wheat 127 355 584 + 360
Maize 113 324 600 + 431
Oat 64 48 25 - 61
Barley 41 150 130 + 217
Rye 47 24 20 - 57
Padi 89 360 596 + 570
Total (M.t.) 481 1261 1955 + 306
In this respect, fertilizer usage has played an important role. Various studies have shown that
between 40 to 60% of the yield increase is attributed to fertilizer application. The impressive
growth in the use of fertilizers is shown in Table 11.

Table 11 : Global Fertilizer Consumption
1930 1975 1999
N 1.3 43.9 85.0
P2O5 2.8 25.8 33.4
K2O 1.4 21.4 22.1
(M.t. nutrient) 5.5 91.1 140.4
Av. yield cereals t/ha 1.1 2.0 3.3
Equally important is the yield per unit area : from 1.1 t/ha to 3.3 t/ha of cereals. This has
greatly alleviated the pressure for more arable land, water and other natural resources.
It is of interest to note that of the three nutrients, nitrogen continues to grow from strength to
strength while those of phosphate and potash have slowed down over the last two decades.
There is a fundamental difference between nitrogen and the others : nitrogen will rapidly
undergo denitrification, volatilisation or leach-off while the phosphate and potash are largely
fixed or accumulated in the soils if they are not removed by the plants.
The popularity of urea goes beyond economics. For urea to be taken up, it must first be
hydrolysed to ammonia, which in turn is oxidized microbiologically to nitrite and then to
nitrate. In temperate regions, urea is used for top-dressing cereals and pasture, through at
80-85% the efficacy of AN/CAN. For rice, urea is the preferred nitrogen source, since the rice
plant is uniquely predisposed to absorb the ammonium radical. In flooded rice, under
anaerobic conditions, the nitrates are rapidly reduced to N2O and gaseous nitrogen and
hence lost to the atmosphere. Elsewhere, urea is used in virtually all crops due to its
widespread availability and competitive pricing.
The largest consumers of urea with an off-take exceeding 1 million tonnes in 1998 are shown
in Table 12. They account for well over 80% of the total off-take. The largest consumers,
China and India, have steadily built new urea capacities to avoid dependency on huge
imports. In the past, the urea market would await for the policy announcement on fertilizers
by the respective governments. The recent loss of 4 to 6 million tonnes import by China had
been largely absorbed by the market but at a price. Urea prices tumbled and the re-export of
urea by China worsened the situation.

Table 12 : 1998 Urea Consumption
(million tonnes)
1 China 26.19
2 India 20.40
3 Indonesia 4.29
4 USA 4.01
5 Pakistan 3.89
6 Vietnam 2.33
7 Bangladesh 1.90
8 Brazil 1.86
9 Iran 1.54
10 Canada 1.40
11 Australia 1.09
12 Egypt 1.09
13 Thailand 1.03
WORLD 86.13

The poor urea scenarios affected the granular urea and prices moved downwards in tandem.
However, granular urea commands a premium over the prills. The superior and uniform
granules facilitate application, particularly when carried out mechanically. They blend well
with DAP/MAP and granular muriate of potash (MOP). In recent years, the trend is towards
“Precision Agriculture” by the North American farmers and “Site-Specific Application” by the
European counterparts (see pictures). Both techniques deploy soil analysis and yield data
with computer-aided blending as the machines, guided by GPS, applies the fertilizers. Aerial
application of fertilizers would also place a high premium on the quality granules as well. In
Australia, USA, Colombia, etc, seeding fertilizer and pesticide applications for rice are aerially
delivered.
Outlook
The current agricultural scenarios remain poor. Global cereal production, now totalling 2.2
billion tonnes, matches consumption and stocks are adequate. Oilseeds production continues
to create new records of harvests. There are huge stock overhangs for sugar, cotton, rubber,
cocoa, coffee, etc. Over the last two years, commodity prices are dredging the bottom

The financial crises of Asia, Russia and Brazil have wrecked the fragile agricultural
commodity market through a series of devaluations. A number of developed countries have
to create “competitive currency devaluations” to remain in the market. The financial crisis also
affected the demand for meat and the livestock problems in Europe and elsewhere added
more problems for the feed market, a significant outlet for cereals and oilseeds. In retrospect,
the poor commodity scenarios appear to have a positive impact as users switch to urea for its
value. In recent years, in India, for example, the changes in its fertilizer policy, had resulted in
the switch-over to urea and thereby wreaking the fine N:P:K balance.
Would urea derived from natural gas face competitive threats in the immediate horizon ? The
answer is an emphatic “No” on grounds of economics. Max Appl, a renown authority on
ammonia production technology, pointed out that in the foreseeable future, urea production
would remain linked to ammonia derived from steam reforming of natural gas due to the
highly competitive economics compared with other feedstocks. (Table 13).
Table 13 : Ammonia production cost from various feedstocks in N.W.
Europe – 1996 (1800t/d, new plant)
Feedstocks/Process Natural gas
steam
reforming
Vacuum
residue partial
oxidation
Coal partial
oxidation
Feedstock price $ GJ 2.75 1.90 1.75
Total energy
consumption
GJ/t NH3 28.5 38 48.5
Energy cost $/t NH3 80 72 85
Other costs $/t NH3 32 42 65
Total costs $/t NH3 112 116 150
Capital-related costs $/t NH3 65 93 168
Grand total cost $/t NH3 177 209 318
Investment $M 225 325 580
(For capital related costs a debt/equity ratio of 60:40 is assumed. With 6% depreciation, 8% interest on debts and 16% ROI
on equity, total capital-related charges are 17.2% on investment).
(From Max Appl’s 50th Anniversary of the IFA Technical Conference, 25-26 Sept. 19997, Sevilla, Spain)

There is very little effort or economic incentive for research using other processes. Over the
very long term, coal has prospects. At the present consumption rates coal will cover the
demand for 235 years, natural gas for 66 years and oil for 43 years.
The use of fertilizer, particularly nitrogenous products, comes under increasing scrutiny by
the global community. During production, greenhouse gases : N2O and CO2 are released. On
the other hand, it has a positive role in sequestrating CO2 during agricultural production.
There is concern that urea is an inefficient fertilizer due to its ease of volatilisation.
While the growth of fertilizer consumption is dependent on global population, the pace of
growth is dependent on its financial well-being. In the developed countries only one in four
units of cereals is used for human consumption. The rest are largely for animal feed. The
converse is true for the developing countries. The demand for meat should increase the pace
of growth for fertilizers.
As for granular urea, it is likely to face increasing competition. With the granulation
technologies readily available at attractive bargains, many new plants would opt for it.
Further, these plants are likely to be erected in the low price, gas-rich regions and the
Russian Federation and the Middle East are likely to be largest competitors in the export
markets for prills and granules respectively. (Figure 4). If the demand for granular urea is to
be sustained, efforts should be directed to greater usage of blends and improved penetration
into rice cultivation.
Acknowledgments
The author wishes to thank MITCO for the opportunity to present the paper and to Mr L.M.
Maene, Director General, IFA, for his fine encouragements and support.

SOURCE: Global Supply and Demand for Urea*
K.G. Soh**
International Fertilizer Industry Association
Paris

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