Market Trends of Asia-Pacific Ammonium Nitrate Industry
Agricultural Sector to Dominate the Market
- Ammonium nitrate is generally used as a fertilizer. The reason why it is very popular in agriculture is because of the high nitrogen amount in this compound.
- Nitrogen is a very important plant nutrient that assists in the growth and metabolic processes that the plant undergoes. Agriculturists prefer using ammonium nitrate since it is a cheap alternative to expensive fertilizers.
- The rapid population growth in India stands as a primary factor, along with supporting domestic exports, which has made it necessary to increase the agricultural yield in the country.
- India is one of the major players in the agriculture sector worldwide, and it is the primary source of livelihood for ~55% of India's population. As most rural households mainly depend on farming for their livelihood and the country's agricultural land suffers from varied degrees of degradation and erosion, many farmers use chemical fertilizers such as nitrogen fertilizers to improve plant nutrients and crop yields, therefore, boosting their earnings.
- As per First Advance Estimates, which was released for Union Finance Ministry and other departments' reference, the total foodgrain production (Kharif crops) in the country is estimated at 149.92 million tonnes in FY2023.
- According to Inc42, the Indian agricultural sector is expected to reach USD 24 billion by 2025.
- Additionally, China, a big agricultural country endowed with rich agricultural resources, has a long history of farming and the tradition of intensive cultivation as well as a huge rural population.
- According to the National Bureau of Statistics, China's total grain output set a new record in 2022, reaching 687 million tonnes, an increase of 0.5% over the previous year, and remained above 650 million tonnes for eight consecutive years.
- Furthermore, China's grain output is expected to reach 694 million tonnes in 2023, up 1.1% from the previous year.
- Therefore, the use of ammonium nitrate fertilizers in increasing agricultural activities in the Asia-Pacific region is likely to impact the market in the forecast period.
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China to Dominate the Market
- China is expected to be the largest and fastest-growing market for ammonium nitrate during the forecast period. Factors such as the growing mining sector and agricultural activities are likely to drive market growth.
- The use of nitrogen fertilizers has played a significant role in maintaining food security in China by allowing large increases in both grain and non-grain yields.
- According to the Ministry of Commerce, China indicates an increase in online retail sales of agricultural products in 2022, wherein online sales of China's farm produce rose 9.2% year-on-year to CNY 531.38 billion (USD 78.58 billion).
- Furthermore, in 2022, China's online retail sales in rural areas reached CNY 2.17 trillion (USD 301.96 billion), up 3.6% year-on-year. While the agriculture sector in the country aims at increasing agricultural output and online sales in the coming years, this is also likely to hold a positive influence on the domestic demand for ammonium nitrate from the sector.
- Additionally, the United States Geological Survey estimates that China accounted for 40-50% of global demand for minerals over the past three decades. China has over 1,500 major mining operations, and approximately 75% of the operations involve underground mining activities. Thus, ammonium nitrate explosives are highly demanded to assist underground activities like creating tunnels, slopes, etc., in the country.
- China's mining industry is enormous. It is the world's leading producer (often by a large margin) of more than 20 metals, including aluminum, cement, coal, gold, graphite, iron and steel, lead, magnesium, rare earth, and zinc.
- China is the third-largest producer of iron ore in the world. According to the United States Geological Survey, in 2022, an estimated 380 million metric tons of iron ore was extracted in China, which was a slight decline from the previous year, which was recorded to be 394 million metric tons.
- Overall, the extended use of ammonium nitrate in the agriculture and mining sector is likely to influence the demand for the ammonium nitrate market in the country over the coming years.
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