Demand and Supply

Urea is the most common and popular nitrogen fertilizer (N fertilizer) globally with 46% of a
high nitrogen level [9], [10], [11], [12]. In the 1920s, industrial-scale urea production started
with the development of the Haber-Bosch process. At present, around 170 million tons of
urea are produced around the world annually.

Global demand and supply

In the 1960s, urea had only a 5% quota of global nitrogen fertilizer usage. In the 1990s, it
jumped up to 40% and then urea became the most used N fertilizer in the world. Today it has
become around 70% [13] and it is expected to go even higher in the future.

Russia, Canada, the USA, and Saudi Arabia are the leading countries in urea production. USA
and Canada represent 20% of the global urea market. China and India are the leading
consumers of global urea production with 50% of the total [13].

In the 2003-2013 period, global production of urea increased by 46% with the production in
East and West Asia while the South Asian region had an increment in importing urea [14].
In 2013, 15% of the global urea demand went to non-fertilizer segments [12]. And urea was
considered the main product in the nitrogen supply with 55% of total output in 2014 [15].
From 2010 to 2021 global urea production and global urea apparent consumption had a 20.2%
growth (from 149 to 179 million tons). Global urea exports and imports also had a 29.5%
increment at the same time. In the 2017-2022 time period, global urea capacity increased by
4.4% while Africa, Central Europe & Central Asia had the highest urea capacity increment of
30% and 28% respectively. It is estimated that from 2022 to 2026, the world will have a
0.74% annual growth rate in global urea capacity.
Current problems associated with global urea production

In 2021, the price of N fertilizers increased many times throughout the year due to many
reasons [16]. Nitrogen (N) is the main raw material for urea production and it is mainly
derived from natural gas. Because of the COVID-19 pandemic, export restrictions were
imposed which eventually disrupted the urea supply chain and caused the price increment of
natural gas [16].
The nominal price of urea has increased three times from the beginning of 2020 to 2022 (from
USD 215/ton in January 2020 to USD 678/ton in September 2022) [17]. And the war between
Ukraine and Russia also has a huge impact on these urea price fluctuations and the high
demand for fertilizers [9]. It is expected that, because of the war and the low production
stocks, global fertilizer supplies will be restricted to some extent in 2022-2023. Due to
inflation, urea prices are likely to increase more. Ultimately, it will affect food prices.
Demand and supply in Sri Lanka

Mainly two types of urea is being used in Sri Lanka [18].

● Prilled urea
● Cristal and granular urea

Urea usage in Sri Lanka

There are standards to prevent the misuse of these fertilizers. The Chemical Fertilization Law
(1988) is regulating chemical fertilizers in Sri Lanka [19].
Urea is largely used by paddy farmers in Sri Lanka. So, the price of urea and the price of
paddy are interconnected.

It is given by the Department of Agriculture (DOA), to get the maximum profit from paddy,
87.42 kg/acre of urea should be applied when the selling price of urea is LKR 122/kg. Then
the output will give 1844.68/acre of paddy [20].

With the fertilizer subsidy for paddy, it is expected to give urea to farmers at a low price than
the market value. In 2020, the subsidy for paddy was LKR 3434 per 50 kg bag of urea and for
other corps, it was LKR 1934 while farmers had to pay LKR 1500 per 50 kg bag of urea [21].
In 2022/23, Urea for the Maha season sold at LKR 10000/kg [22].

In 1990 and 2003, due to the high value of urea, the usage dropped by 30% and 25%
respectively. Urea usage in 1965 was 4.36 kg/ha and in 2013 it increased to 225 kg/ha [23].

Urea Demand

Urea demand in Sri Lanka can be fulfilled by either importing the urea or producing the
desired amount of urea within the country. In this project, it is expected to manufacture urea
within a plant by economically importing ammonia. Urea is mainly imported from China and
the United Arab Emirates [23].
Sri Lanka spends an excessive amount of money to import urea. In 2020, the Urea price in Sri
Lanka was USD 0.05/kg and the export Urea price was 0.21/kg in Russia.

A typical urea plant can produce 500000 t of urea annually. With imported ammonia, urea can
be produced for the local demand of an average of 210000 t/year.

Applications of urea

Urea is heavily used in every crop production industry. Coated urea is the most popular form
of urea fertilizer among consumers. Many reasons cause urea to be the most used N fertilizer.
It can be applied in either a solid or liquid state. And less explosiveness, less transportation
cost, etc. are some of the other reasons [5].

Urea is also used as a fertilizer for the grasslands and not only for the ground soil but also it
can be applied to coastal water [5]. It is used on land as urea-based herbicides or pesticides
and, to prevent frost on agricultural corps or in aquaculture (used in seawater) [5].

Even if it may lead to water pollution, urea can be used as a deicer [5]. Urea can be used to
break down the oil (by stimulating bacterial growth) and it is also used to produce
formaldehyde & plastics, used as an additive for fire retardant coatings, and used in tobacco
products, and the cosmetics industry [5].

One of the global applications of urea is adding to fuel to increase performance and reduce the
emission of global warming gases.

Urea also is used as a nitrogen-excretory product of the dairy industry [5].

What are the future trends in the urea industry?

Global usage of urea fertilizer is continuously increasing and it is expected to go up by 50%

within the next decade [5] and urea will be used more than any other N fertilizer.

With land-based inputs, urea concentration at estuaries and coastal water can be enhanced [5].

By getting uric acid (which has nitrogen nutrients) from non-ruminants animals, urea can be
obtained by going through conversion steps [5].
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Fertilizers and Approaches to Circularity,” ACS Energy Lett., vol. 8, no. 3, pp.
1493–1501, Mar. 2023, doi: 10.1021/acsenergylett.2c02627.
[10] L. Fiamelda, Suprihatin, and Purwoko, “Analysis of water and electricity consumption
of urea fertilizer industry: case study PT. X,” IOP Conf. Ser.: Earth Environ. Sci., vol.
472, no. 1, p. 012034, Apr. 2020, doi: 10.1088/1755-1315/472/1/012034.
[11] M. Skorupka and A. Nosalewicz, “Ammonia Volatilization from Fertilizer Urea—A
New Challenge for Agriculture and Industry in View of Growing Global Demand for
Food and Energy Crops,” Agriculture, vol. 11, no. 9, Art. no. 9, Sep. 2021, doi:
10.3390/agriculture11090822.
[12] Khalid A. Ibrahim, M. Y. Naz, S. Shukrullah, S. A. Sulaiman, A. Ghaffar, and N. M.
AbdEl-Salam, “Controlling nitrogen pollution via encapsulation of urea fertilizer in
cross-linked corn starch,” BioRes, vol. 14, no. 4, pp. 7775–7789, Aug. 2019, doi:
10.15376/biores.14.4.7775-7789.
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77, no. 3, pp. 441–463, Feb. 2006, doi: 10.1007/s10533-005-3070-5.
[14] P. Heffer and M. Prud’homme, “Global nitrogen fertiliser demand and supply: trend,
current level and outlook,” 2016.
[15] P. Heffer and M. Prud’homme, “Fertilizer Outlook 2015-2019,” 2015.
[16] Food Outlook – Biannual Report on Global Food Markets. FAO, 2022. doi:
10.4060/cb9427en.
[17] H. Favez, “Global Fertilizer Markets and Policies: A Joint FAO/WTO Mapping
Exercise”.
[18] “SPECIFICATION FOR UREA (FERTILIZER GRADE) (First Revision).” Accessed:
Mar. 19, 2023. [Online]. Available:
https://www.agrimin.gov.lk/web/images/2022.06.16_fertilizer_standard/fertilizer_standar
d.pdf
[19] “Data Collection Survey on Agricultural Sector in Sri Lanka Final Report.” Accessed:
Mar. 19, 2023. [Online]. Available: https://openjicareport.jica.go.jp/pdf/12326278.pdf
[20] H. Kanthilanka and J. Weerahewa, “Do price subsidies lead to over application of
fertilizers? an analysis of Kethata-Aruna Program of Sri Lanka,” Trop. Agric. Res., vol.
30, no. 4, p. 133, Nov. 2019, doi: 10.4038/tar.v30i4.8335.
[21] “f64f9700-0402-49d0-9f38-f28629a8c379.pdf.” Accessed: Mar. 19, 2023. [Online].
Available: https://www.treasury.gov.lk/api/file/f64f9700-0402-49d0-9f38-f28629a8c379
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2022/23.” Accessed: Mar. 19, 2023. [Online]. Available:
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programme in Sri Lanka. Colombo, Sri Lanka: Hector Kobbekaduwa Agrarian Research
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