Asia's ammonia requirements to rise for acrylonitrile production

12:01 PM | December 6, 2019 | Francinia Protti-Alvarez

Yara-BASF Ammonia plant at Freeport, TX.  Source: KBR
By the end of the next decade, Asia will overtake North America as the net acrylonitrile exporting region, despite North America's advantage in propylene and ammonia feedstock. The increase in exports corresponds with an expansion of Asian acrylonitrile capacity, which will call for higher imports of ammonia into the region.

Nonfertilizer applications for ammonia will drive demand growth over the next few years to the point where ammonia supply could tighten in the medium term with an impact for acrylonitrile and other applications.

North America exported about 400,000 metric tons of acrylonitrile in 2018, the bulk of it to Northeast Asia and other Asian markets, according to IHS Markit data.

Meanwhile, higher production of natural gas in North America has driven an increase in ammonia availability. "The most dramatic change to ammonia trade ensued after the start-up of the YaraBASF joint venture ammonia plant at Freeport, Texas, in 2018," said Georgy Eliseev, principal analyst/ammonia at IHS Markit, in a presentation to the IHS Markit Asia Chemical Conference, held in Singapore in November.

"Since then, the United States has halved its foreign ammonia imports from 3.89 million metric tons [MMt] in 2015 to about 1.96 MMt in 2018. The Freeport plant covers the bulk of the ammonia demand for the local petrochemical industries, including most of the North American acrylonitrile producers located nearby," Eliseev said.

But acrylonitrile production in Asia is slated to increase and with it the region's need for ammonia. Most acrylonitrile producers are not back-integrated with ammonia, so Asia's merchant ammonia import requirements are set to rise.

"Currently, 58% of the world's acrylonitrile output is in the Asia/Pacific region. The region imports 70% of the ammonia it uses in acrylonitrile production," Eliseev said. "While fertilizer applications will remain the most critical uses of ammonia, nonfertilizer uses are expected to show the highest growth rate over the next 10 years. Over this period, although ammonia demand from fertilizer applications will increase, it will represent a slightly lower portion of the consumption. Meanwhile, nonfertilizer uses will grow to represent about a quarter of the demand."

Industrial applications accounted for 36% of the 19.7 MMt of ammonia traded in 2018. Acrylonitrile accounted for 7.8% of traded ammonia demand, or about 1.54 MMt, IHS Markit data show.

"China is a growing ammonia import market—about 1 MMt in 2019—despite possessing a domestic ammonia production many times higher. Low international prices are encouraging China's ammonia imports. However, the lack of port infrastructure limits these imports. There are four terminals receiving ammonia, and two of them opened recently," Eliseev noted.

Other large ammonia-importing markets in the region are South Korea and Taiwan, each with mature petrochemical industries that require ammonia. Demand there is growing at a slower rate than China. Meanwhile, Japan's ammonia imports are decreasing as petrochemical production moves to China and other Asian countries.

As nonfertilizer ammonia applications drive growth, developments in China may lead to significant changes to the worldwide merchant ammonia supply/demand balance. In the past decade, China added capacity to become self-sufficient, but this has now plateaued. No significant additions of merchant ammonia capacity are anticipated to come online over the next four years, with consequences for merchant ammonia supply.

Learn more about the issues facing ammonia markets during the Fertilizers and Agribusiness Seminar at the World Petrochemical Conference in New Orleans, Louisiana, March 24–27, 2020.