Nitrogen Market

Nitrogen is the most significant nutrient of the three main ones (alongside phosphorous and potassium) and the main component in the global fertilizer trade. As a lack of it in soil causes substantial declines in crop yields, demand for nitrogen fertilizers is relatively insulated from fluctuations in the global economy.

Lack of nitrogen reduces crop yields. A deficiency of nitrogen in soil impacts plant growth. As a protein and part of chlorophyll, nitrogen affects every stage of a plant’s development: growth of the stem and leaves, colouration, productivity and the quantity and quality of the product harvested. The element is often the main factor affecting a harvest: a lack of it can stunt plant growth. As nitrogen does not build up naturally in soil and is released with every harvest, it needs to be added every time seeds are sown. All of this ensures stable demand in the nitrogen fertilizer segment. Figures from the IFA show that in the 2008-09 season, when the crisis reached its peak, global consumption of nitrogen fertilizers dropped by a mere 1%, compared with a fall of 19% for potassium and 11% for phosphate products. In the following season, nitrogen consumption recovered to pre-crisis levels.

Nitrogen: the most popular nutrient. The most important component of the global fertilizer trade, nitrogen is present in over 60% of the fertilizers consumed worldwide. Most of the nitrogen goes on cultivating grain crops, which are the basis for ensuring global food security, with cereals accounting for around half of all nitrogen fertilizers used worldwide.

Demand for nitrogen fertilizers is inelastic. The fertilizer industry is inextricably linked to the production of foodstuffs. Given the necessity of food for humans, demand for the main goods in the consumer basket does not depend on income levels. This underpins the positive forecast for the industry. The economic crisis that erupted in 2008 once again proved the stability of demand for fertilizers, particularly nitrogen products. Figures from the IFA for 2009 show that overall consumption of fertilizers (N+P+K), which had been hit particularly hard by the crisis, rose by 2.1%, including a 3.0% increase for nitrogen fertilizers. By comparison, in the same year, consumption of steel dropped by 8.6% (according to Wordsteel), coal by 3.8% (EIA) and natural gas by 2.1% (BP).

Between 2010 and 2014, the IFA forecasts that consumption of nitrogen fertilizers will climb by 8%, or 2% a year on average, to 112 million tonnes.