The increasing cost of gas feedstock, from which most of the world’s urea fertiliser is produced, is making fertiliser production in high-demand markets such as Europe and the US increasingly less viable.
European imports of urea, the most widely used fertiliser, increased by 24 per cent between 2004 and 2006, while in North America they reached 5.2 million tonnes in 2006, compared with 3.5 million tonnes in 1999, according to figures from the International Fertiliser Industry Association.
Strong population growth and rapidly increasing use of fertilisers in China and India is also fuelling growth in the trade. Urea demand in South Asia increased fourfold between 2004 and 2006, making it the world’s largest importing region, accounting for18.8 per cent of global demand.
The Middle East, which has a plentiful supplies of gas, is not wasting any time in capitalising on the opportunity. According to fertiliser consultant Fertecon, the region will increase its share of world urea exports to more than 50 per cent by 2015, from about 40 per cent today. In the Gulf alone, urea capacity is set to almost double to 20.1 million tonnes a year (t/y) by 2015, from 12.8 million t/y in 2007.
With high gas prices set to continue for the foreseeable future, and strong population growth among emerging fertiliser consumers also likely to continue, the region’s fertiliser producers are in an enviable position.