Published December 2016
Urea is the most popular form of solid nitrogen fertilizer, particularly in the developing regions of the world, and is traded widely on the international market. Urea prices can fluctuate markedly and frequently, depending on crop prices, which affect demand. Around 80-85% of the production is used as a fertilizer. More than 40% of all food grown in the world is fertilized by urea.
Urea is also used increasingly in the industrial sector to make urea-formaldehyde resins, melamine, diesel exhaust fluids, and livestock feeds. It is also used to make adhesives and paints, laminates, molding compounds, paper, and textiles.
The following pie chart shows world consumption of urea:
The Middle East plays an important role in the urea market, with several new projects coming up that will cater to the export market. Chinese production that served the export market is expected to decline after a major surge during the past few years. There have also been investments in India to increase capacity based on government policy aimed at encouraging greenfield projects based on LNG feedstock that could be subject to natural gas supply restraints. India is the largest importer of urea, accounting for close to 20% of global imports, and is expected to continue its imports despite the planned additions.
Currently, the Southwest Asian region along with China consumes over 55% of the total urea produced. Southeast Asia and the United States follow with 9% and 8%, respectively. During the forecast period, the global urea market will be driven by the Asia Pacific region, North America, and Latin America.
Growth in the consumption of urea is driven, in part, by the increasing global population, available disposable income, and dietary changes. In addition, although arable land has been increasing, the amount of arable land per capita has been decreasing as a result of the increases in population. As a result, more fertilizer will be needed to meet the growing need for food.
Demand originating from the nonfertilizer sector is seen to have a growing potential for urea, mostly in deNOx applications in North America, Europe, and East Asia. A significant growing use of urea is in environmental applications, where it is being used in mobile and stationary nitrous oxide (NOx) reduction, both of which are being mandated by legislation. Urea is used as a diesel exhaust fluid (DEF) as one of the key elements of the selective catalytic reduction (SCR) process to reduce nitrous oxides from heavy0duty diesel engines. It was initially used in thermal power plants in Japan and from the mid-1980s, it found widespread use in Europe. In the United States, SCR began with coal0fired power plants to control NOx. It later spread to plant and refiner heaters and boilers in the chemical sector.
Environmental consumption in both the United States and Europe has grown rapidly during 2009-16, and is projected to continue to grow during the forecast period. The United States, which lags behind Western Europe in this application, is projected to have a growth rate of about 8% annually during 2016-21.
Demand for urea grew at almost 3% annually during 2000-16, but is forecast to slow to just over 2% annually during 2016-21. Fertilizer applications accounted for an estimated 82.3% of all urea consumption in 2016. Industrial applications accounted for the remainder, led by production of urea0formaldehyde resins and melamine, livestock (animal) feed, and environmental and other applications. Use in environmental applications is growing rapidly for both stationary and mobile nitrous oxide (NOx) reduction applications.