Nitrogen-based fertilizer accounts for more than 80% of the world’s ammonia market. About 60% of the world’s fertilizers are nitrogen based.
The basic feedstock for the production is natural gas, although China used coal gasification as its primary feedstock. Low cost and availability of natural gas have led to a steady, stable ammonia market over the past few years. That coupled with decreased demand driven by a weak global economy since 2008, lower food prices, and a glut of new capacity have depressed world fertilizer prices. This has impacted fertilizer manufacturers’ earnings potential in recent years, depressing stock prices and causing consolidations, cost cutting, and production curtailments. The next chart shows the cost of nitrogen-based fertilizers from 2010 to 2014. The surge in fertilizer-production capacity, led by China, shows prices for nitrogen fertilizer have recently returned to the lows of 2010.
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