Urea is a popular solid nitrogen fertilizer because of its high nitrogen content (46%), with nearly 90% of output going into fertilizers. Most world output is in a solid form, either prills or granules, or crystalline for specialised small-volume uses. In a number of industrialised countries, a growing volume of liquid product is consumed in the production of nitrogen solution fertilizers, and in liquid cattle feeds. 
Urea is used in the developing regions of the world and is widely traded on international markets due to its relatively cheap transport costs. While many markets prefer other nitrogen fertilizers for better agronomic properties, urea is the commodity reference product with an important influence on most other nitrogen fertilizer prices.
There are two main hubs in urea trade – the Black Sea and Arab Gulf. These flows are said to determine the global prices. The Black Sea normally supplies Europe and Latin America while the Arab Gulf supplies North America and Asia/Oceania. All other trade flows tend to be more regional but can be important when they affect the need for Black Sea or Arab Gulf material.
Urea is also used in the manufacture of urea-formaldehyde (UF) resins produced by the condensation reaction between urea and formaldehyde. These resins find outlets in adhesives for paper, board, plywood, surface coatings moulding resins and textile processing. They are also used to coat textiles, paper and leather.
Another outlet is the synthesis of melamine employed for the production of melamine-formaldehyde (MF) resins. These are used in adhesives and paints, and for laminates, moulding compounds, impregnating paper and textiles.
A growing use for urea is in a process called selective catalytic reduction to reduce NOx emissions from diesel engines. A urea solution (AUS32 or AdBlue) is sprayed into the engine’s exhaust fumes where it converts the nitrogen oxides to nitrogen and water.
Urea is also a constituent of cattle feeds, and is a useful viscosity modifier for casein or starch-based paper coatings. Small quantities are used as an intermediate in the manufacture of polyurethanes, pharmaceuticals, toothpaste, cosmetics, flame-proofing agents, sulphamic acid and fabric softeners.
Global growth slows
The growth in global urea production slowed from 6.5% in 2007 to only 1.7% in 2008 when it is estimated by the International Fertilizer Industry Association (IFA) to have reached 146m tonnes.
Global urea trade in 2008 was marked by two distinct phases, said the IFA. Import demand was buoyant in the first half followed by a sluggish second half with more tonnage available for export than the import market could absorb. Exports decreased by 10% over 2007 to an estimated 32.8m tonnes.
A few projects suffered delays in commissioning and construction and it is anticipated that future slippage will occur. The IFA forecasted that world urea capacity will increase by 47m tonne/year between 2008 and 2013 to reach 210m tonne/year, a growth rate of 5.2%/year.
Global demand for urea is forecast to grow at 3.7%/year to around 175m tonnes in 2013. Much of the increase was from fertilizer demand while industrial applications for urea, accounting for 12% of total consumption, is expected to grow at 6.5%/year.
Looking at the urea supply/demand balance from 2009 to 2013, the IFA concluded that there will be relatively balanced conditions in 2010 and 2011, moving into a growing surplus by 2012.
Urea demand in China was resilient in 2008, despite downward market pressures, growing at 4% over 2007. However, exports fell by 20% to an estimated 4.7m tonnes, according to the IFA. China has introduced a new export tax system based on low and high seasons to help boost exports but at time of writing it was having little impact due to China’s lack of competitive strength.
India ranks as the world’s second largest urea producer as well as a major importer. Capacity increases will take place in the 2009-2013 period with the IFA estimating 17% growth to 25m tonnes/year.
The Middle East is expected to become the world’s largest exporting region as capacity is increased from 15.5m tonne/year in 2008 to 24m tonne/year by 2013.
In the US, apparent consumption is estimated by the IFA at 12.6m tonnes in 2008 and production at 6.2m tonnes. With growing demand and unchanged capacity, urea imports are likely to grow to between 7m and 8m tonne/year.
European demand boosted by NOx emissions control
Global consultant Nexant estimates West European output to be 2m tonnes N in 2008, down on 2007's level of 2.2m tonnes N. Production in Central and Eastern Europe (CEE) will rise to 7m tonnes N in 2008, up from 6.6m N tonnes in the previous year, according to Nexant. Consumption in Western Europe and CEE will each rise by 100,000 tonnes N in 2008, to reach 3.6m tonnes N and 2.7m tonnes N, respectively.
World demand growth is put at 3-4%/year over the long term. Nexant says demand in Western Europe will grow by about 1%/year. Consumption in the industrial sector (for UF/MF resins) is increasing at close to GDP levels. Demand will also be boosted by the use of urea in diesel engines to achieve NOx emission targets set by the EU.
CEE markets will grow by 3.5%/year, driven by availability of arable land and the introduction of urea for diesel emission control in Central Europe. These markets are expected to supply the growing deficit in Western Europe, says Nexant.
(Updated: June 2009. Sources: ICB Chemical Profile, 10 November 2008; IFA Annual Conference, Shanghai, May 2009.)
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