Market Drivers

Ammonia is the new black.  There.  It has been said out loud.  No longer to be only whispered amongst those who are speculating about what the ever-evolving petrochemical market will do next.

Ammonia is not a very sexy chemical.  It is not something one thinks about before going to bed at night.   However, as natural gas prices remain low and domestic supply of natural gas remains abundant, ammonia is quickly becoming more interesting to domestically produce as a primary building block for nitrogen-based fertilizers.  Nitrogen is an essential element of life, and all commercial fertilizers contain their nitrogen in the ammonium and/or nitrate form (Apodaca, 2013).

Fertilizers are an integral step in the agricultural production chain.  The United Nations estimates that the world population will reach 7.7 billion by 2020, an increase of 35 percent from 5.7 billion in 1995 (U.S. Geological Survey, 1999).  The need for fertilizer grows as the population grows.

As the need for fertilizer grows, so does the need for ammonia.  This need, coupled with the low prices of natural gas feedstock as well as the use of ammonia itself as a low-cost feedstock for production of nylons and some plastics, creates a very favorable climate for U.S. production of ammonia.

U.S. Ammonia Market

Domestic Production

As of 2015, ammonia was produced by 13 companies at 29 plants in 15 states; however, about 60{a45ba3acbba73cdc9d8868db37f310c949be44167a7da7bf3b84f03faeb6b5e8} of total U.S. ammonia production capacity was located in Louisiana, Oklahoma, and Texas thanks in large part to each of these states’ natural gas supplies.

The United States was one of the world’s biggest producers and consumers of ammonia, even though existing facilities were operating at about only 80{a45ba3acbba73cdc9d8868db37f310c949be44167a7da7bf3b84f03faeb6b5e8} of rated production capacity.  The measurement of consumption for market analysis purposes is known as “apparent consumption” and is calculated as production plus imports minus exports, adjusted to reflect any changes in stocks.  [Pull Quote: Over the course of the last ten years, our net import reliance as a percentage of apparent consumption has declined from 41{a45ba3acbba73cdc9d8868db37f310c949be44167a7da7bf3b84f03faeb6b5e8} to 29{a45ba3acbba73cdc9d8868db37f310c949be44167a7da7bf3b84f03faeb6b5e8}].

This decline in reliance on imports represents a systemic shift in domestic production from approximately 7.9 million metric tons (Mt) per year in 2006 to approximately 9.4 Mt per year in 2015.  [Pull Quote: During the next four years, an estimated 5 million metric tons per year in additional production capacity is expected to come online in the United States].  However, even at higher domestic production numbers, the United States will likely still be importing additional ammonia from foreign markets such as Trinidad and Tobago, Canada, Russia, and the Ukraine (U.S. Geological Survey, 2016).

New Construction

Five new world-scale ammonia plants will start up this year or next in the United States, with construction progressing for CF Industries at Donaldsonville, LA, and Port Neal, IA; Dyno Nobel at Waggaman, LA; OCI’s Iowa Fertilizer Company at Wever, IA; and Yara’s joint venture with BASF at Freeport, TX (Brown, 2016).  The BASF project is worth noting as BASF will upgrade its current terminal and pipeline assets on  behalf of Yara for the export of ammonia from the new plant to other (likely domestic) locations (BASF, 2015).  This is noteworthy because it becomes the only export terminal in Texas capable of handling ammonia.  Infrastructure cost is one of the primary impediments to the United States becoming a bigger player in the global ammonia market where China, India, and Russia dominate.  A marine liquids terminal would need to be exporting anywhere from 50,000 Mt to 100,000 Mt of ammonia per month to create favorable enough profit conditions to justify the expense of additional infrastructure required to accommodate ammonia which is highly volatile and requires special storage tanks and handling processes.

Despite the volatile nature of the chemical itself, the facilities listed above are just a few among a growing list of ammonia plants that are in the process of being constructed.  Some, like the Agrifos / Borealis joint venture going by the moniker “Gulf Coast Ammonia, LLC,” have been announced but are still in the site selection process (Borealis, 2015).  Still more are being discussed in hushed tones.


The domestic market for ammonia is stable and growing due to the prominence of the United States in the global agriculture market- both as producers of fertilizers and of food.  As of 2013, ammonia production in the United States represented 10{a45ba3acbba73cdc9d8868db37f310c949be44167a7da7bf3b84f03faeb6b5e8} of the 144 Mt global production (Apodaca, 2013).

The facilities coming online will not make the United States a net zero importer of ammonia even if they operate at full capacity.  Thus, there is still opportunity for additional domestic capacity to meet domestic needs.  Further, if natural gas prices remain low, there is opportunity for the United States to become an exporter on the global market in a much bigger way than we have in the past.    In the last four years, the United States has seen a twenty-four fold increase in exports of ammonia, yet export numbers are still marginal.

Because ammonia production profitability is tied directly to natural gas feedstock, the flurry of new ammonia production facilities suggests that the market anticipates low natural gas prices for the mid-term and perhaps even the long-term.  The challenge for the United States in taking advantage of this market to become a leading exporter goes back to infrastructure cost; but it is a challenge that can be overcome with a broad, market-based consensus to bet on domestic natural gas supply maintaining its effect on global natural gas prices.


By: Traci L. Koenig, Director of Economic Development

The “Economic Alliance Industry Brief” column contains the latest research and market trends and is written with the intention of being a piece to be referenced throughout the quarter as you conduct your business.  You may also subscribe to receive a curated digital digest of some of the articles used in the writing of this column at the following address:


Apodaca, L. (2013). U.S. Geological Survey Minerals Yearbook: Nitrogen (Advance Release). U.S. Geological Survey.

BASF. (2015, July 27). Yara and BASF Break Ground on New Ammonia Plant in Freeport, Texas. Retrieved from BASF News Release:

Borealis. (2015, May 20). Borealis and Agrifos Announce Major Milestone in the Development of Ammonia Production Project in U.S. Retrieved March 10, 2016, from Borealis Media Releases:

Brown, T. (2016, February 10). Ammonia Plants in the Pipeline: Will They or Won’t They. Retrieved from Ammonia Industry:

Fertecon. (2016). Ammonia Report: Weekly Review of the Ammonia Market, February 26, 2016. London: Fertecon.

U.S. Geological Survey. (1999). Fertilizers- Sustaining Global Food Supplies. Reston: U.S. Department of the Interior.

U.S. Geological Survey. (2016). Mineral Commodity Summaries: Nitrogen (Fixed) – Ammonia. U.S. Geological Survey.