By China Nitrogen Fertilizer Industry Association

Current situation and main problems of domestic nitrogen fertilizer industry

1. Major achievements during the 13th Five-Year Plan period (2016-2020)

1) Reduction in outdated capacity – China’s nitrogen fertilizer industry phased out 19.79 million t/a of outdated synthetic ammonia capacity and 17.87 million t/a of outdated urea capacity, both from 2016 to 2020, when domestic capacity of synthetic ammonia reached 66.76 million t/a and that of urea 66.34 million t/a, down 8.7% and 19.1%, respectively, from 2015. Output of nitrogen fertilizers was down 14.5% from 2015 to 40.33 million tons in 2020, that of synthetic ammonia down 11.9% to 58.84 million tons, and that of urea down 20.3% to 56.23 million tons.

2) Acceleration in adjusting industry structure – Synthetic ammonia employing new coal gasification technology made up an increasing share of capacity, reaching 46.1% in 2020 up 16.9 percentage points from 2015, versus a decrease of 17.6 percentage points seen by synthetic ammonia adopting atmospheric intermittent coal gasification technology. In terms of product structure, green and high-efficiency nitrogen fertilizers developed rapidly. Capacities of new urea and nitro fertilizers both exceeded 10 million t/a in 2020. Domestic nitrogen fertilizer firms actively developed new products, like liquid fertilizers, water-soluble fertilizers, calcium ammonium nitrate and nitrate phosphate fertilizers. In addition, they also paid attention to important or new chemical materials such as olefins, ethylene glycol and polycarbonate.

3) Improvement in production intensification – Many world class scale nitrogen fertilizer projects have been constructed since 2016, and a 600 000 t/a synthetic ammonia unit and a million ton-grade urea unit have been put into production. The number of synthetic ammonia companies each with capacity exceeding 300 000 t/a was 104 in 2020, accounting for 78.9% of total capacity, up 13.9 percentage points from 2015; the number of urea firms each with capacity of more than 500 000 t/a reached 64, taking up 82.1% of total capacity, up 11.8 percentage points from 2015. Further, there were 20 synthetic ammonia firms and 24 urea enterprises, all boasting capacity of at least one million t/a.

4) Technical innovation – Capabilities of domestic nitrogen fertilizer firms to innovate technologies were greatly improved, leading to a batch of technologies meeting advanced world standards. Breakthroughs were made in scale, high efficiency, low energy consumption, coal selection, etc., relying on advanced coal gasification technologies, e.g. coal water slurry and dry pulverized coal gasification technology. Other technologies successfully put into use mainly included large-scale ammonia synthesis technology, low energy consumption urea technology, 360 000 t/a nitric acid production technology, etc. Further, a group of technology innovation platforms were established.

5) Improvement in cleaner production – Energy consumption per ton of ammonia products was down 5% from 2016 to 2020; emissions of COD, ammonia nitrogen and total nitrogen fell around 40%; emissions of air pollutants (e.g. particulate matters, sulfur dioxide and oxynitride) declined 35%.

6) Soaring non-agricultural demand for nitrogen fertilizers – Nitrogen fertilizer enterprises actively expanded downstream markets, with demand from areas like caprolactam, melamine, boiler flue gas denitrification and vehicle urea growing significantly during 2016-2020. This alleviated overcapacity of nitrogen fertilizers.

2. Main problems related to economic benefits, product structure, innovation, energy consumption, international operation

1) Profit ratio of sales of the nitrogen fertilizer industry rose 3.2 percentage points from 2015 to 1.98% in 2020, lower than 4.21% of the chemical fertilizer industry and 6.51% of the chemical industry (return on total assets, more than two percentage points lower than the other two industries).

2) The product structure is not reasonable, with urea making up most shares and new nitrogen fertilizers accounting for quite limited. In addition, these new fertilizers are homogenous. Hence failure in meeting requirements of improving agricultural product quality. Some firms made progresses in diversifying downstream products, but most are currently engaged in bulk, mid and low-end products. Innovative, high-end products are in short supply.

3) Compared with foreign enterprises, domestic nitrogen fertilizer firms need more effort to innovate technologies, especially techniques regarding reaction efficiency of ammonia synthesis, energy efficiency of air (syngas) compressor units, critical pump valve reliability, key materials and energy consumption of urea units, product chains, etc. Innovation ability is important for enterprises to boost core competitiveness.

4) The nitrogen fertilizer industry has to contend with high energy consumption, high emissions of pollutants (e.g. VOCs, exhaust/dust from urea granulation, etc.), low efficiency in reducing and recycling pollutants, great pressure to reduce carbon emissions and potential safety hazards. Energy consumed by the nitrogen fertilizer industry takes up 14% of the chemical industry’s total; emissions of ammonia nitrogen, total nitrogen, VOCs and carbon dioxide account for 30%, 14%, 10% and 20%, respectively, of the chemical industry’s total.

5) Scale of China’s nitrogen fertilizer industry is in a leading position in the world, but as for overall competitiveness in the international market, it remains weak, given relatively high costs of products and lack of advanced technologies, international talents and related operating experiences.

Main objectives during 2021-2025

* Total capacity will be kept to reasonable levels, and balance of supply and demand at synthetic ammonia, urea and nitrogen fertilizer markets will be basically achieved in 2025 (see Table 1 for details). In detail, synthetic ammonia capacity will be up around 1% annually to 71 million t/a in 2025, with a rate of capacity utilization of 88%. New capacity will be 17 million t/a, and abandoned capacity will be no less than 13 million t/a. Urea capacity will increase slightly to 68.5 million t/a, with a rate of capacity utilization of 87%. New urea capacity will be six million t/a, and abandoned capacity will be four million t/a. Capacity of nitrogen fertilizers will decrease slightly to 50.5 million t/a, including new capacity of three million t/a. Abandoned capacity will reach 3.5 million t/a.

* Raw material structure of synthetic ammonia will be adjusted continually. Capacity proportion of synthetic ammonia made by new coal gasification technology will be up to 65% in 2025 from current 46.1%, that of synthetic ammonia with atmospheric intermittent coal gasification technology down to 12% from current 29.1%, and that of synthetic ammonia employing natural gas as raw materials down to 18% from current 19.5%.

* To satisfy diversification of agricultural production, green and high-efficiency fertilizers will be greatly developed, including liquid fertilizers, water-soluble fertilizers, etc. Further, development of fertilizer synergistic carriers, fertilizer additives and more downstream applications will be propelled. Technical innovation is necessary for companies to upgrade equipment, increase production efficiency, improve digital management, etc. Other targets mainly involve environmental protection. For example, emissions of ammonia nitrogen and total nitrogen are expected to fall more than 10% by 2025; emissions of particulate matters, sulfur dioxide and nitrogen oxide, more than 15%. Energy consumption per ton of ammonia products will decline continually.

Main measures over the next five years

1. To promote capacity structure upgrading by: 1) supervising total capacity (outdated units will be phased out; new projects shall meet requirements on energy consumption, pollutant emissions, equal/reduced replacement or on other issues); 2 optimizing existing capacity with advanced technologies

2. To accelerate product structure upgrading and find new growth engines by: 1) developing green and high-efficiency fertilizers, especially nitro compound fertilizers, water-soluble fertilizers, bio-fertilizers, etc.; 2) researching high-end chemical products (syngas downstream products for example) by means of technologies like coal-based polygeneration; 3) expanding application of synthetic ammonia and urea in non-agricultural areas such as caprolactam, melamine, etc.

3. To advance technical innovation by: 1) making breakthroughs in key technologies like clean, efficient, super large scale coal gasification technology; coal gasification technology applying to local/inferior/high-sulfur coal; one million ton-grade high-efficiency low-pressure ammonia synthesis technology, etc.; 2) strengthening innovation capabilities of enterprises via guiding them on increasing related investment, cooperating and cultivating talents; 3) utilizing digital technologies such as 5G and big data technology

4. To propel green, low-carbon development by: 1) propagandizing related ideas; 2) improving related standards such as energy consumption limit per unit of synthetic ammonia and urea; 3) promoting application of eco-friendly technologies, e.g. waste water zero discharge technology, VOC treatment technology, etc.; 4) improving safety level relying on intelligent control centers and major hazard monitoring rooms; 5) making plans to lower carbon emission intensity, boost utilization of CO2, manage carbon assets, etc.

5. To improve agrochemical related services by: 1) utilizing internet in product marketing or promotion; 2) integrating different links such as product delivery and technical guidance; 3) promoting intelligent facilities like intelligent fertilization equipment, liquid fertilizer applicators, etc.

     6. To propel establishment of chemical fertilizer product traceability system and nitrogen fertilizer industry credit system, expand areas of international cooperation, strengthen export competitiveness (via increasing export of high value-added products like compound fertilizers, new fertilizers and nitro fertilizers), and expand international markets.