Nitrogenous Fertilizers

SIC 2873

Companies in this industry

Industry report:

This category includes establishments primarily engaged in manufacturing nitrogenous fertilizer materials or mixed fertilizers from nitrogenous materials produced in the same establishment.

After a stagnant and declining period in the late 1990s through the early 2000s, industry shipments rose steadily to $14.6 billion in 2008. About 72 percent of the establishments in this category had 20 or fewer employees.

The main source of nitrogen for fertilizer production is atmospheric nitrogen, of which there is abundant supply. An estimated 35,000 tons of nitrogen are over every acre of land. For plants to utilize this element, however, it must first be combined with either oxygen or hydrogen in a process called "fixation."

The primary ingredient of most nitrogenous fertilizers is anhydrous ammonia, which the fertilizer industry typically forms by fixing atmospheric nitrogen with the hydrogen found in the natural gas methane. The resulting compound is a gas that is 82.25 percent nitrogen. This gas is stored in containers that are pressurized and usually refrigerated. It may be injected beneath the soil surface as a fertilizer. In 1992 natural gas prices shot upward and accounted for 70 percent to 85 percent of ammonia production costs. This put the United States at a cost disadvantage compared to countries such as Russia, Canada, and Mexico, which have abundant and lower-priced sources of natural gas.

Anhydrous ammonia may be combined with nitric acid to produce ammonium nitrate, an excellent fertilizer that is highly combustible. A third type of fertilizer, urea, can be made by combining anhydrous ammonia with carbon dioxide. Urea has a higher nitrogen content and is easier and safer to store and handle than ammonium nitrate. Some nitrogenous fertilizer materials are made from organic substances such as sewage sludge.

Demand for urea and other nitrogen-based fertilizers was strong during the mid-1990s, but in the late 1990s the industry floundered when China withdrew from the market. In an attempt to curtail imports and support its own domestic production, China imposed an import tax on urea, which substantially increased the product's price there. The resulting oversupply caused the price of urea to slump in other countries. Along the Gulf of Mexico, the domestic delivery point for the raw commodity, the price dropped from $191 per ton to $110 per ton in just 10 months. As manufacturers reduced their production of urea and began making more ammonia instead, the price of ammonia also dropped.

Conditions improved in the early 2000s when the China Nitrogenous Fertilizer Industry Association determined to produce more fertilizer. In the first half of 2004, China produced 9.55 million tons of urea, an increase of about 15 percent over the same period the previous year. Due to cost increases, increases in demand, and the U.S. dollar devaluation, the price of urea in the international market continued to increase. As of 2006, the price of urea had reached $418 per ton.

Partly due to China's reentry into the market, U.S. imports of manufactured fertilizers increased from $1.86 billion in 2000 to $2.79 billion in 2004. Only Brazil imported more fertilizer than the United States in the mid-2000s. Canada and Russia were the two top exporters of fertilizers during this period. The U.S. Census Bureau estimated that in 2005 the industry shipped $3.95 billion worth of synthetic ammonia, nitric acid, and ammonium compounds. Shipments of urea totaled $1.02 billion, and shipments of nitrogenous fertilizer materials of organic origin totaled $162 million.

According to industry statistics, an estimated 472 plants manufactured nitrogenous fertilizer materials or mixed fertilizers from nitrogenous materials. Industry-wide employment was 11,643 workers. The majority of plants were located in California, Texas, Illinois, Ohio, and Iowa. Based on shipments, Illinois, Iowa, Colorado, and Ohio were responsible for nearly all the industry revenue.

Nitrogenous fertilizers were manufactured at 186 plants, with shipments totaling $10.3 billion and a workforce of 4,430. Natural (organic) fertilizers, except compost were manufactured at 192 plants, earning $3.1 billion in revenue and employing 3,508 workers.

Fertilizer market conditions deteriorated rapidly through the second half of 2008. Abundant supply coupled with no demand led to volatile fertilizer price swings. Anhydrous prices fell 86.6 percent, as did the price of urea by more than 70 percent. Thus, fertilizer prices were expected to remain unpredictable well into 2009. High prices dropped demand, which dropped prices low enough that fertilizer producers around the world cut production. "Those tons of production that are shut down may be tons that the market needs," Doug Stone, senior vice president for sales and marketing of Terra Industries noted in Farm Industry in February 2009.

Leaders in this category included Terra Industries Inc. of Sioux City, Iowa, with 2008 sales of $2.8 billion. Terra was one of the leading North American producers of nitrogen fertilizers and the top U.S. producer of urea ammonium nitrate solutions in 2006. CF Industries Holdings of Deerfield, Illinois, which changed from a cooperative to a holding company in 2005, manufactured nitrogenous and phosphatic fertilizers and had 2008 sales of $3.9 billion. The company had 1,400 employees. Scotts Miracle-Gro (formerly the Scotts Company) of Marysville, Ohio, was another big company in the fertilizer business, with 2008 sales of $2.98 billion.

Companies involved in the manufacture of nitrogenous fertilizer were moving toward "green manufacturing" in the mid-2000s, which aimed to prevent pollution and save materials and energy through innovation and development. The trend in the fertilizer manufacturing industry was to reduce pollution at its source. Other means of protecting the environment and meeting increasingly stringent government regulations were through recycling, using more environmentally friendly raw materials, and inventing new and innovative technologies for production.

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News and information about Nitrogenous Fertilizers

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