Report

Global urea market is projected to witness a CAGR of 3.22% during the forecast period 2024-2031, growing from USD 60.13 billion in 2023 to USD 77.48 billion in 2031. The market is significant in enhancing agricultural productivity and various industrial processes. Urea is an organic nitrogenous compound, mainly associated with fertilizer application for increased crop production. Therefore, it is an indispensable part of the agriculture industry. An increase in food production is the key factor influencing the growth of the market. Farmers are increasingly turning to urea and other nitrogen fertilizers to enhance soil and promote crop growth.
Apart from being employed in agriculture, urea finds its importance in various other industries such as manufacturing resins, adhesives, plastics, and chemicals. This flexibility makes it an important raw material for industries apart from agriculture. Increasing requirements from all sectors drive the urea market to grow incessantly.
The global urea market is primarily concentrated in Asia-Pacific, where countries utilize massive amounts of urea and earn considerable revenue due to huge agricultural sectors. China and India are the top two countries in this regard.
In addition, the rising adoption of advanced technologies in urea production, which guarantees more productivity while minimizing negative effects on the surroundings, supports the growth of the market. Nevertheless, challenges such as changing prices of raw materials, limitations imposed by government laws on the usage of fertilizers, and health issues related to nitrogen pollution can alter the current market trend.
To summarize, growth in the demand from agriculture and industrial sectors, together with the constant evolution in production technology and sustainability practices, will promote the growth of the global urea market.
Considering the rising demand, in September 2024, QatarEnergy announced to increase its urea output to more than 12.4 million tons per year from 6 million tons. In fact, four new urea production lines have been constructed to boost the output by 106%.
Rising Ammonia Production Capacity Catalyzes Market Expansion
The ever-increasing ammonia manufacturing potential is one of the factors propelling the growth of the global urea market. The most important raw material used to produce urea is ammonia, which is produced from natural gas resources. The rise in ammonia production capacities guarantees the supply of ammonia for urea production processes. Many areas, especially those rich in natural gas resources, are focusing on the enhancement of ammonia synthesis and are investing more in the same. The excess capacity assists in addressing the increasing global demand for urea, which is especially in demand in the agricultural sector, where it is a key nitrogenous fertilizer.
Increasing ammonia production minimizes supply chain interruptions, helping stabilize urea pricing and facilitate market expansion. Nations that aspire to take a central role in the fertilizer sector are also building new ammonia facilities, enhancing the competition in the international arena.
In October 2024, Yara International ASA inaugurated its latest ammonia import terminal in Brunsbuttel, Germany. The terminal allows the company to build an infrastructure capable of enabling low-emission ammonia imports to Europe of up to three million tons annually. The Brunsbuttel facility produces 800,000 tons of ammonia and 770,000 tons of urea per year.
Government Initiatives to Influence Market Growth
Support offered by the government has a significant impact on the global urea market, especially among developing nations where agriculture is the main income-generating activity. In many countries, urea and other nitrogenous fertilizers are subsidized by the government to enhance agricultural production and improve food security. These subsidies make urea cheaper for farmers, thereby encouraging its application in crop production. In Asia-Pacific and other densely populated agricultural regions, the fertilizer programs sponsored by the government are integral in maintaining the demand.
In addition, state authorities are enhancing infrastructure and factory facilities, thereby aiding domestic industries in augmenting urea production capacity. This assistance guarantees the uninterrupted availability of fertilization products and places urea as an integral element in the practice of sustainable agriculture.
For instance, in April 2023, work on Perdaman's USD 6 billion Pilbara urea project was commenced by the governments of Australia. It was the first new gas manufacturing project in Pilbara in over ten years. Woodside's Scarborough Gas Project in Western Australia would convert natural gas into an estimated 2.3 million tons of urea annually through this project.
Fertilizer Grade to Hold a Significant Market Share
Fertilizer grade urea has the largest share of the global urea market and is expected to rise in the forecast years. This is largely attributed to its high nitrogen content, which is widely used in agriculture. Fertilizer grade urea is used in almost every facet of modern agriculture, from growing vegetables to raising livestock, due to its high nitrogen content, economical price, and uncomplicated usability over a variety of crops and soil types. This flexibility and effectiveness are especially helpful in regions with extensive agricultural practices, such as Asia-Pacific and North America.
The increasing global food demand due to population growth and changes in eating habits are increasing the need for fertilizer grade urea. In addition to this, the governments of developing countries are offering grants and assistance to help farmers procure nitrogen-based fertilizers, thereby significantly enhancing the market share of this segment.
Aligning with the market trend, in July 2023, SABIC Agri-Nutrients Company (SABIC AN) introduced low-carbon urea and shipped it to Timaru, New Zealand, to an agricultural co-operative company, Ravensdown. The total consignment weight was 2,700 tons of urea. SABIC AN manufactured the urea using low-carbon ammonia and went a step further in being the first-ever entity to achieve an independent low-carbon ammonia certification. The certification was from the independent testing, inspection, and certification agency, TUV Rheinland.
Asia-Pacific to Dominate the Market Share
Asia-Pacific accounts for the major share of the global urea market due to its broad agricultural base and increasing food demand driven by population growth. Countries such as China and India are among the largest urea consumers as they depend on nitrogen fertilizers to increase the yield of their crops. Due to the region's dependence on agriculture as the main source of income and the available government assistance towards using fertilizers, there has been an increase in the demand for urea.
Besides, ample urea production capacity exists within the region making sure constant supply for the local and export needs are met. Another factor that adds to the region's leading stance in the urea market is the rapid adoption of modern farming practices and the expansion of farmland in developing countries, which is a fundamental driver for market growth.
In April 2024, the Government of India sanctioned the product Nano Urea Plus for production by IFFCO in the next three years. This product's nitrogen content is 16%, and the product is intended to supply crop nitrogen during critical growth phases. For three years, IFFCO will produce the product substituting normal urea with the enriched nitrogen variant of the product.
Future Market Scenario (2024 - 2031F)
- The increase in environmental concerns will contribute to more eco-friendly methods of production, such as using green ammonia and advanced technologies for applying urea fertilizers to minimize nitrogen losses.
- The increasing use of urea in industries such as resin, adhesive, and chemical manufacturing will extend the scope of urea application beyond its traditional use in agriculture.
- The cost of natural gas and any geopolitical factors will impact ammonia production, eventually affecting the supply chains and the markets for urea.
Key Players Landscape and Outlook
The global urea market is characterized by a competitive landscape dominated by several large producers with extensive distribution networks. These key players focus on enhancing production capacities and expanding geographically to meet the rising demand for urea, particularly in agriculture and industrial applications. For instance, in May 2024, German chemicals manufacturer BASF SE added its first biomass balance (BMB) urea products to its portfolio. The product line ranges from urea solution 40% BMBcert, urea prills BMBcert, and urea solution 45% BMBcert. The certified mass-balance products comply with the International Sustainability and Carbon Certification (ISCC) PLUS standard. Furthermore, BASF SE uses electric power derived from renewable sources in the manufacturing process of urea products, leading to reduced emissions.
The market is expected to witness steady growth driven by increasing demand for nitrogen-based fertilizers, particularly in emerging economies where agriculture remains a critical sector. Industrial applications, such as resins and adhesives, are anticipated to boost market expansion. Environmental regulations concerning fertilizer use and the shift to more sustainable agricultural practices may influence the market, promoting innovation in urea products. Asia-Pacific is projected to remain a significant market, while other regions like North America and Europe will also contribute to global demand.