Ammonia

What it is

Ammonia (NH3) is a colorless gas produced by combining atmospheric nitrogen with hydrogen under high pressure and temperature. It is the world's second-most-produced chemical by volume, at roughly 185 million tonnes per year as of 2024, and the foundational input for virtually all synthetic nitrogen fertilizers: urea, ammonium nitrate, diammonium phosphate (DAP), and monoammonium phosphate (MAP). About 70% of global ammonia output feeds directly into food supply chains, supporting the nutrition of an estimated 3.5 billion people. The remaining 30% goes to industrial uses including explosives, refrigerants, and, increasingly, as a candidate zero-carbon fuel for ocean shipping.

History

The Haber-Bosch process, developed by Fritz Haber (nitrogen fixation demonstrated 1909) and Carl Bosch (industrialized at BASF from 1913), is among the most consequential technological achievements of the 20th century. Before it, crop yields were bounded by available organic nitrogen. By the 1960s, Haber-Bosch ammonia was fueling the Green Revolution across South and Southeast Asia. Today, China produces roughly 30% of global ammonia, with Russia, the United States, India, Qatar, and Saudi Arabia as the other major producers. Yara International (Norway) and CF Industries (United States) are the largest commercial producers. The process is energy-intensive, requiring temperatures of 400-500°C and pressures of 150-300 atmospheres, consuming roughly 1-2% of global energy supply. Natural gas provides the hydrogen feedstock in most plants, making ammonia production responsible for approximately 1.8% of global CO2 emissions, around 450 million tonnes per year.

Current state

As of mid-2026, the market is recovering from a severe supply disruption. Iran's closure of the Strait of Hormuz from February 2026 severed roughly a third of globally traded fertilizer volumes, pushing urea prices from around US$250 per tonne pre-closure to US$959 per tonne at the April 2026 peak, as documented in the Hormuz ammonia price surge. China's simultaneous export restrictions, imposed in late 2025 to protect domestic food security, compounded the supply squeeze. The crisis hit India hardest, which imports 25% of its urea and 100% of its potash. June 2026 prices dropped to around US$449 per tonne after China partially resumed exports, but US and South Asian farmers who reduced nitrogen applications in spring 2026 face yield shortfalls this autumn, per USDA projections; the fertilizer cost lag is expected to persist into 2027. Global food prices, tracked by the FAO food price index, remain near three-year highs partly on elevated nitrogen costs.

On the energy transition front, projects producing low-emission ammonia reached final investment decision on 3.4 million tonnes per year of capacity in 2024, double the 2023 figure, according to the IEA Global Hydrogen Review 2025. Green ammonia, produced by coupling water electrolysis with renewable electricity, then feeding the resulting hydrogen through a standard Haber-Bosch reactor, delivers near-zero lifecycle emissions. But as of 2024, under 1% of global hydrogen used in ammonia production came from low-emission sources.

Relationships

Ammonia sits at the intersection of the natural gas market and global food supply. Most conventional ammonia plants run on natural gas as the hydrogen feedstock; when gas benchmark prices spike sharply, as at Europe's TTF hub in 2022 (over €300/MWh at peak), plants curtail output or shut entirely, tightening fertilizer supply within weeks. Geopolitical control of gas supply chains therefore translates directly into agricultural input costs worldwide. The major ammonia exporters, Qatar, Saudi Arabia, Russia, and Trinidad and Tobago, all sit on gas reserves and can use export policy as leverage. China's dual role as the largest ammonia producer and largest urea exporter means its domestic policy decisions function as a global price switch.

What to watch

• Whether China formally lifts its urea export restrictions or maintains them through Northern Hemisphere planting seasons into 2027.
• Commissioning timelines for announced green ammonia projects in Australia, Norway, Chile, and Oman, and whether offtake agreements hold.
• IMO negotiations on ammonia as a marine fuel, particularly safety certification and bunkering infrastructure standards.
• Any further closure or disruption at the Strait of Hormuz, which remains a chokepoint for Middle Eastern ammonia and urea exports.
• Natural gas benchmark prices in Europe (TTF) and Asia (JKM), which set the cost floor for conventional Haber-Bosch ammonia globally.