Ammonium Nitrate Market

Market Overview

The ammonium nitrate market was valued at USD 21.4 billion in 2023 and is projected to reach USD 29.8 billion by 2031, registering a CAGR of 4.6% during the forecast period (2024 to 2032). This increase in market value has been catalyzed by the growing population, creating an increased demand for food supply and real estate. Incidentally, it is a valuable resource for both industries.

Ammonium nitrate (AN) is a widely used chemical compound with several important applications. It is also the main component in many mining explosives, typically mixed with fuel oil and detonated by an explosive charge. Increased global agriculture activities, combined with the rising demand for ammonium nitrate fuel oil (ANFO), mean that the market for ammonium nitrate is expected to grow at a compound annual growth rate (CAGR) of 4.5% over the next 10 years.

Beyond agriculture, it is dominant in explosive mixtures used for mining, quarrying, and civil construction. In fact, as a key ingredient in ANFO, it accounts for a staggering 80% of explosives used in North America, underscoring its importance in these industries.

Additionally, a growing population is driving up the need for high-quality food, but the limited availability of arable land is putting pressure on farmers to boost crop yields. To meet this challenge, farmers are increasingly relying on fertilizers, which has led to a surge in demand for ammonium nitrate, a crucial component in fertilizer production.

Market Dynamics

Market Drivers

Growing Agricultural Demand for Fertilizers

Increasing consumption of ammonium nitrate in the production of agricultural products or fertilizers is a major factor fuelling the market growth. Ammonium nitrate used for fertilizer is available as prills or as powder. Fertilizers play an important role in providing nutrients to the soil and plants to grow and increase the crop yield. It is one such fertilizer used to provide adequate nitrogen levels to plants.

The increasing adoption of precision agriculture technologies is enabling farmers to optimize the use of fertilizers for precisely monitoring and managing crop nutrition levels. For instance, in April 2024, AGCO Corporation launched PTx as a new brand for its precision agriculture technology, combining various technologies from AGCO’s tech stack. It is the most popular form of nitrogen fertilizer in most European countries and some other temperate-zone countries.

This rising technology penetration will lead to an increase in ammonium nitrate material coatings to provide controlled release strength, improved nutrient utilization, and reduced risk of leaching.

Increasing Usage in Mining and Explosives

Development in mining activities leads to greater use of explosives, which is predicted to drive up demand for ammonium nitrate during the forecast period (2024-2032). Ammonium nitrate by itself is not explosive. It is, nevertheless, one of the components used in the creation of explosives. According to the UN classification for dangerous goods, it is categorized as an oxidizer. It needs other components, such as fuel, etc., to become explosive. Such explosive compositions need detonators or other initiators to ignite. The primary ingredient of slurry explosives used in mining is ammonium nitrate. However, fertilizer is frequently the source of ammonium nitrate utilized in improvised explosive compositions. The integration of digital platforms and IoT devices in the mining sector will also simplify the use of ammonium nitrate in the blasting industry to increase safety and efficiency.

Market Restraints

Alternatives and Government Regulations Hinder the Market’s Growth

The ammonium nitrate market faces significant obstacles, primarily due to stringent government regulations and growing concerns about its potential misuse in explosive manufacturing. These restrictions have led to a decline in sales and transportation, prompting some distributors to discontinue handling the fertilizer. Furthermore, the increased risk of fatal explosions and the chemical’s substantial contribution to climate change and environmental degradation have raised alarm bells. Recent capacity expansions have resulted in reduced operating rates and downward pressure on prices, potentially forcing high-cost production facilities to idle. As a result, the industry must navigate these challenges to sustain its growth and explore innovative solutions to mitigate the environmental and safety concerns.

Moreover, the market is witnessing a rise in alternative fertilizers, such as urea and nitrogen-based products, which are expected to hinder the growth of the ammonium nitrate market in the forecast period.

Segmental Analysis

By End-use

The global Ammonium Nitrate market is divided into different sectors based on how it’s used: Agriculture, Explosives, Industrial applications, and Others. In 2023, the agriculture sector was the largest consumer, accounting for about 59.4% of the market. This is mainly due to the growing population, which is increasing the demand for food. As a result, the agriculture industry is expected to grow further in the coming years.

The explosives sector had the second-largest market share at 26.3%, showing the widespread use of ammonium nitrate in mining and construction for blasting purposes.

Industrial applications accounted for 6.3% of the market share, reflecting their use in various chemical processes and manufacturing.

Regional Analysis

The global ammonium nitrate (AN) production capacity, production, and consumption are dominated by Eastern Europe, Western Europe, China, and the United States. Combined, these four regions accounted for 70.8% of capacity, 69.2% of production, and 68.1% of consumption in 2022.

Based on the region segment, Europe is the leading region in the Ammonium Nitrate market, accounting for about 41.2% of the global share in 2023. Asia Pacific is the second-largest consumer of ammonium nitrate. The demand for Ammonium Nitrate in the Asia Pacific is expected to increase due to higher fertilizer usage driven by agricultural needs in developing countries like China, India, and Bangladesh. Additionally, Russia has the highest production capacity. The increase in construction activities, along with affordable labor and land, will also contribute to market growth in these regions. In India, significant growth in the agricultural sector is expected due to rising investments in modernizing agricultural infrastructure, such as warehousing and irrigation systems. Additionally, government programs aimed at educating farmers about fertilizer use will further boost fertilizer demand in the area.

The North American ammonium nitrate market is growing due to increased demand from the mining & quarrying and the construction industry. This demand is mainly driven by the United States and Canada, particularly from their defense sectors, which need explosives. As a result, there is a significant need for ammonium nitrate for both defense purposes and fuel oil. While Canada’s fertilizer industry is expanding, the U.S. remains the main agricultural market in the region, supported by many fertilizer suppliers and a strong export market. The agricultural sector is expected to continue growing during the forecast period.

In Latin America and the Middle East & and Africa, steady growth is anticipated due to rising demand for ammonium nitrate fertilizers in agriculture. Countries like Oman, Saudi Arabia, Qatar, and the UAE are seeing increased demand from their mining sectors. In Latin America, growing populations are driving up agricultural production needs, further boosting the demand for ammonium nitrate as a key fertilizer ingredient. The ongoing development of the mining sector and the versatile use of ammonium nitrate explosives are also contributing to the market’s growth in these regions.

Recent Development

1. In March 2024, Argus introduced the first global assessment for low and zero-carbon calcium ammonium nitrate (CAN), a popular nitrogen-based fertilizer in Europe, reflecting the production costs of CAN using blue or green ammonia to emphasize sustainability.
2. In March 2024, EuroChem’s Nevinnomysskiy Azot commenced commissioning works for a new production facility capable of producing over 70,000 tonnes yearly for focusing on water-soluble fertilizers like potassium nitrate to enhance its agricultural technology application.
3. In July 2023, Yara Clean Ammonia and Bunker Holding signed an MOU (Memorandum of Understanding) to develop the market for ammonia as a shipping fuel. Ammonia is being used as a marine fuel for decarbonized maritime transportation.
4. In 2023, Chambal Fertilizers announced plans to build a greenfield 240,000 tonne/year technical ammonium nitrate (TAN) plant at its Gadepan complex in the northwestern Rajasthan state. The plant is expected to commence operations by October 2025.