Recent analysis of several hundred nitrogen fertilizer production facilities spanning the globe indicates that the industry is headed for overcapacity. As soon as 2019, fertilizer producers will find little pricing strength as global utilization dives to ~73% as new facilities come online.
Neil Fleishman, CFA, Director of industry research firm Green Markets stated “There is high confidence in a long run bearish view on nitrogen prices as supply is continuing to rapidly outpace demand. The next year will be a tipping point in that multiple expansions in Russia, Brazil, Argentina, Egypt, Saudi Arabia, Bangladesh, India, Indonesia and Vietnam will contribute to a global glut.” Fleishman is closely tracking the trend, and while the global picture is one of oversupply, he reports significant variability at the country and regional level.
The North American nitrogen fertilizer market (which includes production of primarily Ammonia, Urea, Ammonium Nitrate, and UAN) is capitalizing on cheap gas and expanding capacity by magnitudes that once seemed implausible. As such, Fleishman indicates that “…the next several years will see the North American fertilizer market turn as domestic production replaces imports and export availability disrupts global dynamics. Lower global utilization levels will keep a lid on price.”
The Global Nitrogen Supply & Demand Model from Green Markets updates fertilizer market-balance data on a quarterly basis for this key nutrient category. The model tracks individual factory output, at the country level.