Different market segments have different requirements for ammonia quality and cost.

Since 2022, the domestic green ammonia project planning has been put into construction, considering that the construction period of the project is generally 2 to 3 years, the domestic green ammonia project is about to usher in centralized production. The industry predicts that by 2024, domestic green ammonia or will achieve batch entry into the market, and the supply capacity will be close to 1 million tons/year by 2025. From the perspective of market demand for synthetic ammonia, different market segments have different requirements for product quality and price of synthetic ammonia, and it is also necessary to start from the trend characteristics of each market link to explore the market opportunity of green ammonia.

Based on the overall supply and demand pattern of synthetic ammonia in China, the product quality demand of each market segment and the cost of ammonia, NENG Jing research simply analyzed the profit and market space of green ammonia in each market direction for industry reference.

01 Green ammonia market has three main directions

At this stage, the supply and demand of the domestic synthetic ammonia market are relatively balanced, and there is a certain excess capacity pressure.

On the demand side, apparent consumption continues to grow. According to the National Bureau of Statistics and customs data, the synthetic ammonia market is dominated by domestic consumption, and the apparent consumption of domestic synthetic ammonia will increase by about 1% annually from 2020 to 2022, reaching about 53.2 million tons by 2022. By 2025, with the production expansion of caprolactam and other downstream devices, it is expected to support the growth of synthetic ammonia consumption, and the apparent consumption will reach 60 million tons.

On the supply side, the total production capacity of synthetic ammonia is in the stage of “bottoming out”. According to the data of the Nitrogen Fertilizer Industry Association, since the opening of the backward production capacity of synthetic ammonia in China during the “13th Five-Year Plan” period, the structural adjustment of production capacity has been completed by 2022, and the production capacity of synthetic ammonia has changed from a decrease to an increase for the first time, recovering from 64.88 million tons/year in 2021 to 67.6 million tons/year, and more than 4 million tons/year of annual capacity (excluding green ammonia) is planned to land. By 2025, the production capacity or more than 70 million tons/year, the risk of overcapacity is high.

Agriculture, chemical industry and energy will be the three main market directions of synthetic ammonia and green ammonia. The agricultural and chemical fields constitute the stock market of synthetic ammonia. According to the data of Zhuochuang Information, in 2022, the consumption of synthetic ammonia in the agricultural field will account for about 69% of the total consumption of synthetic ammonia in China, mainly for the production of urea, phosphate fertilizer and other fertilizers; The consumption of synthetic ammonia in the chemical industry accounts for about 31%, which is mainly used in the production of chemical products such as nitric acid, caprolactam and acrylonitrile. The energy sector is the future incremental market for synthetic ammonia. According to the statistics and calculations of Energy research, at this stage, the consumption of synthetic ammonia in the energy field is still less than 0.1% of the total consumption of synthetic ammonia, and by 2050, the proportion of synthetic ammonia consumption in the energy field is expected to reach more than 25%, and the potential application scenarios mainly include hydrogen storage carriers, transportation fuels, and ammonia-doped combustion in thermal power plants.

02 Agricultural demand – The downstream cost control is strong, green ammonia profit margin is slightly smaller, the demand for ammonia in the agricultural field is relatively stable. The ammonia consumption scenario in the agricultural field mainly includes the production of urea and ammonium phosphate fertilizer. Among them, urea production is the largest ammonia consumption scenario in the agricultural field, and 0.57-0.62 tons of ammonia are consumed for every 1 ton of urea produced. According to the National Bureau of Statistics, from 2018 to 2022, domestic urea production fluctuated around 50 million tons/year, and the corresponding demand for synthetic ammonia was around 30 million tons/year. The amount of ammonia consumed by ammonium phosphate fertilizer is about 5 million tons/year, which is also relatively stable.

The production of nitrogen fertilizer in agricultural field has relatively relaxed requirements for the purity and quality of ammonia raw materials. According to the national standard GB536-88, liquid ammonia has excellent products, first-class products, qualified products three grades, ammonia content reached 99.9%, 99.8%, 99.6% or more. Nitrogen fertilizer, such as urea, has wider requirements for the quality and purity of products, and manufacturers generally require liquid ammonia raw materials to reach the grade of qualified products. The overall cost of ammonia in agriculture is relatively low. From the perspective of the supply of ammonia and the cost of ammonia, domestic urea and some ammonium phosphate fertilizer production has a self-built ammonia plant, the cost of ammonia depends on the market price of coal, natural gas and the efficiency of ammonia plant, the cost of ammonia is generally 1500~3000 yuan/ton. On the whole, the acceptable price of ammonia raw materials in the agricultural field is less than 4000 yuan/ton. According to the bulk product data of the business community, from 2018 to 2022, urea is about 2,600 yuan/ton at the highest price, and about 1,700 yuan/ton at the lowest price. Energy research combined with various stages of comprehensive raw material costs, process costs and other factors, if no loss, urea at the highest and lowest prices corresponding to ammonia costs of about 3900 yuan/ton to 2200 yuan/ton, in the green ammonia cost line and below the level.