The Global Urea Market Size was expected to grow at a CAGR of 3.8% during the forecast period (2023–2031)
The chemical formula for urea, known as carbamide, is CO(NH2)2. Two amino groups (-NH2) are linked by a carbonyl functional group (-C(=O)-) to form this amide. As a result, it is the carbamic acid amide with the lowest basicity. Urea, which is the main nitrogen-containing molecule in mammal urine, is crucial to animals' metabolism of nitrogen-containing compounds. It is a tasteless, colorless chemical that is extremely water soluble and practically non-toxic (the LD50 in rats is 15 g/kg). Dissolving in water does not produce an acidic or alkaline reaction.
Urea is a key raw material for the chemical industry and is frequently used as a nitrogen source (N) in fertilizers. Friedrich Wöhler made the crucial conceptual advancement in chemistry in 1828 when he realized urea could be made from inorganic raw elements. This disproved the widely believed vitalism dogma, which claimed that only live organisms could manufacture the chemicals of life, by demonstrating for the first time that a substance hitherto known only as a result of life could be synthesized in the lab without biological starting ingredients.
Technical grade urea is normally a type of organic compound—technical grade used for various industrial applications. Technical urea is extensively used in urea-formaldehyde (UF) resin, a non-transparent thermosetting polymer. These resins are adhesives in plywood, particle board, medium-density fiberboard (MDF), and molded objects. In pharmaceuticals, urea is extensively used in chemical synthesis to produce medical drugs, disinfectants, and fish oils or omega. Additionally, the biofuel industry uses technical-grade urea in the fermentation process.
Technical urea can also make high-explosive urea nitrate, a solubility-improving and moisture-retaining addition to dye baths for textile dyeing or printing, a non-corrosive substitute for rock salt for de-icing roads, and a mixture of urea and potassium bicarbonate that is used to make dry chemical fire extinguishers. These factors are expected to drive the urea market worldwide.
The harmful gases emitted through automobile combustion adversely impact the environment and human health. Urea is used in diesel exhaust systems to reduce nitrous oxide (NOx) emissions. UF resins, composed and manufactured from urea, are widely used in automotive industries. These resins are widely used in automobile tires to enhance rubber bonding to the cord. In addition, shifting preference toward radial tires is also likely to positively affect the market. Increasing customers' focus on changing automobile tires at regular intervals is another factor likely to drive the use of the urea formaldehyde resin, boosting the demand for urea.
The fluctuation in the prices significantly impacts the overall market of a product. The prices for most the fertilizer upsurged in 2021, especially urea. This was mainly due to increasing demand and higher input costs as countries worldwide were recovering from industrial shutdowns and manufacturing activities were regaining pace. Future price changes are anticipated due to rising natural gas and coal prices, environmental regulations, and geopolitical unrest like the conflict in Ukraine and Russia.
Post-pandemic, the supply chains are now on the path of getting reinstated. This has bolstered global energy demands, which is the key driving factor behind high fertilizer prices. Agriculture commodity prices for crops, such as corn and soybeans, have increased amidst tighter supplies. Urea consumption has grown due to increased agricultural acreage and the application of important fertilizers like nitrogen. Therefore, a demand-supply gap is expected to make urea prices volatile, restricting market growth.
In the agriculture industry, urea is a common fertilizer. The primary purpose of urea fertilizer is to supply nitrogen to plants, which encourages the growth of green leaves and gives plants a lush appearance. Urea also helps plants during the process of photosynthesis. Since urea fertilizer can only supply nitrogen, not phosphate or potassium, bloom growth is its main application. Urea is a nitrogenous fertilizer typically utilized in agricultural output as a whole.
According to the Food and Agriculture Organization (FAO), the total global nitrogen demand for fertilizers accounted for 1,08,744 kilo tons in 2020, witnessing a growth rate of 1.23% compared to 1,07,424 kilotons demand in the previous year. In addition, according to the World Bank, the value-added for global agriculture, forestry, and fishing industry accounted for USD 3,680 billion in 2020, witnessing a growth rate of 4.49% compared to USD 3,522 billion in 2019, thereby increasing the demand for fertilizers from the agriculture segment and creating opportunities for the growth of urea market.
Based on grade, the global urea market is segmented into fertilizer, feed, and technical.
The fertilizer segment owns the highest market share and is predicted to exhibit a CAGR of 3.46% during the forecast period. Urea fertilizer grade is a nitrogen-rich organic nutrition additive for plants and soil. Pure urea is non-toxic, pH-balanced, and contains around 46% nitrogen by volume when dissolved in water. Pure urea fertilizers are fine crystalline granules, slow-release pellets, or coated granules. They are also commonly employed in liquid foliar feed fertilizers and give a strong nitrogen component to solid combination fertilizers like urea phosphate. In addition, they are popular in fertilizer irrigation systems due to their easy solubility. Fertilizer manufacturers consume 90% of all manufactured urea. The crystalline and granular varieties of urea fertilizer are the most popular ones. Crystallized urea fertilizers provide the best presentations and fastest release times for dry urea applications. The soil needs more time to break down granular urea fertilizer because it is coarser. All kinds can be utilized with mechanical spreaders and in fertigation systems, fertilizer/irrigation combinations, and premixed foliar feeds.
Urea feed grade is a small diameter, spherical white solid organic molecule (amide) containing 46% nitrogen in amine groups. Cattle and other ruminants can benefit from adding feed-grade urea to their diets because it improves digestion, maximizing the advantages of low-quality forage, especially during the dry season. When the quality of the grazing feed is low, feed-grade urea can also aid in preventing weight loss in cattle by improving rumen function. The main application of feed-grade urea is a cattle feed supplement. The urea is added to cattle feed to boost the protein content. In addition, urea is only a nutrient to animals with rumens that possess the urease enzyme, which allows the metabolism of the chemical. In the diets of cattle, feed-grade urea can be a useful source of protein. The utilization of urea as a protein source in many cattle diets may be particularly cost-effective due to the high cost of feed grains and numerous high-protein cereals.
Based on the end-user industry, the global urea market is divided into agriculture, chemical, automotive, medical, and others.
The agriculture segment is responsible for the most significant market share and is anticipated to exhibit a CAGR of 3.53% over the forecast period. Almost 90% of the urea produced worldwide is used as a nitrogen-release fertilizer. Urea has the highest nitrogen concentration (46.7%) of all solid nitrogenous fertilizers. As a result, it has the lowest transportation expenses per nutritional unit of nitrogen. In the non-chernozem zone and moist locations, nitrogen fertilizers are practical ways to increase agricultural productivity and profitability. Nitrogen fertilizers are specially used as a supplement for crops and are mostly used in agriculture for harvesting. The continuously growing population has substantially created a requirement to increase agricultural products worldwide. In this regard, farming activities have created the demand for such fertilizers to keep the soil quality intact, offer required crop nutrients, and improve agricultural land yields.
Urea is used to manufacture various chemicals, including urea-formaldehyde resins, urea-melamine-formaldehyde, and melamine. Melamine is further used in melamine-methanal resin manufacturing. Moreover, urea-formaldehyde resins are used mostly as adhesives for bonding particleboard, plywood, and other structured wood products. Furthermore, urea-formaldehyde resins are also used to produce plastics for various applications, including laminates, electrical appliance casing, and others. In addition, urea can trap a variety of chemical molecules as clathrates. The urea molecules that comprise the interpenetrating helices hold the organic components in place. This characteristic separates mixtures and has produced lubricating lubricants, paraffin separation, and aviation fuel.
Based on region, the global urea market is bifurcated into North America, Europe, Asia Pacific, South America, and the Middle East and Africa.
Asia-Pacific is the most significant global urea market shareholder and is anticipated to exhibit a CAGR of 4.57% during the forecast period. In nations like India and China, the agriculture industries are developing due to population growth. This boosts the need for nitrogen fertilizers, which fuel the market. Urea consumption is increasing outside of agriculture due to chemical, automotive, and healthcare advancements. In China, grain production reached 682.9 million tons in 2021, up from 650 million tons the previous year, a 2% rise, according to the National Bureau of Statistics. The country's fertilizer industry is anticipated to be driven by an upsurge in the usage of fertilizers to boost productivity and offset a decline in cultivated land. China shipped 849,000 tons of urea from July to September 2022, up from 303,000 tons and 421,000 tons in the first and second quarters of the same year, respectively. In India, retail fertilizer sales in 2021 decreased by 12.4% from April to July compared to the previous year's period. All of the major nutrients have had a reduction in sales, with urea experiencing a 12.8% increase. Thus, all these factors are predicted to propel the regional market growth.
North America is expected to grow at a CAGR of 3.40% over the forecast period. The North American region includes the U.S., Canada, and Mexico. The U.S. is the largest market contributor in the region. According to the ITC trade map, the U.S. was the second-largest importer of urea in the world in 2020, with the imported quantity standing at 4.56 million tons for application in fertilizers, animal feed, automotive, and chemical industries. The United States addresses agricultural and food policy through various programs, including commodity support subsidies, nutrition assistance, and conservation. Such factors are responsible for driving the agriculture industry in the country. In addition, the growing demand for mineral nutrients and high-performance fertilizers to boost productivity is expected to drive the market for urea during the forecast period. Likewise, the United States is the second-largest animal feed-producing country. With the rising demand for animal production, the demand for feed has been increasing, increasing the demand for urea in the country.
Germany dominates the regional market in Europe. Germany, one of the foremost automotive manufacturing hubs, is home to various manufacturers, including equipment manufacturers, material and component suppliers, engine manufacturers, and system integrators. Urea-SCR is used to reduce NOX emissions from the exhaust stream of vehicles, thereby fueling market expansion. In addition, urea is used to manufacture various chemicals that have various applications in particleboard, plywood, laminates, electrical appliance casing, and others. According to the European Chemical Industry Council, AISBL, the chemical and pharmaceutical industry turnover accounted for EUR 190.6 billion in 2020 and is likely to grow in the coming years, considering increasing investments in research and developments (R&D). Furthermore, almost 80% of German chemical and pharmaceutical companies are engaged in research activities, and R&D spending reached EUR 13.7 billion in 2020 and is expected to reach EUR 25.7 billion by 2050, thereby likely enhancing the demand for the market.
The market in South America is growing considerably. Brazil is the leading revenue generator in the region. Brazil is among the top 5 consumers of fertilizers across the globe. The International Fertilizer Industry Association estimates that the nation consumed about 15.88 million metric tons of fertilizers in 2019 and expects that number to rise, given the rising demand for crop production. In addition, according to Altech Agri-Food Outlook 2022, Brazil produced around 80.01 million metric tons of feed in 2021, compared to 78.41 million metric tons in 2020. With the rising demand for animal production, the demand for feed is increasing, thereby increasing the demand for urea in the country.
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