15th AFA Int.'l Fertilizers Forum & Exhibition - Arab Fertilizer ...

15 th AFA Int.’l Fertilizers Forum &
Exhibition
February 10 - 12, 2009
Cairo Semiramis Intercontinental Hotel, Egypt
Global Fertilizer Supply and Demand
& Future Prospects
Michel Prud’homme and Patrick Heffer
IFA
France

Global The Future Fertilizer of Enhanced Enhanced-Efficiency
Supply and Efficiency Demand
And Fertilizers Future Prospects (EEFs) Globally
Michel Prud’homme and Patrick Heffer
International I IInternational t Luc ti M. l F Fertilizer Maene tili I Industry and d t Patrick A Association i Heffer ti (IFA)
International Fertilizer Industry Association (IFA)
15th Focus AFA for Int'l Success Fertilizers Forum & Exhibition
Cairo 22-24 - February January 2008, 2009 2009Coral
Gables (FL), USA
o World Agricultural Situation
o World Fertilizer Demand
Contents
o World Fertilizer Supply and Supply/Demand Balances
Production and Trade Trends
Capacity Developments
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February 2009
2009
1

2400
Key Factors Impacting Fertilizer Demand
Short Term
1- World Agri-Commodity Markets
2- Economic Situation
3- Agricultural and Environmental Policies
Medium to Long Term
1- World Population Growth
2- Changing Diet in Emerging Economies
3- Constraints on Natural Resources
Million tonnes
2500
2200
2100
2000
1900
1800
1700
4- Environmental and Climate Changes Concerns
5- Technological Developments
6- Innovative Fertilization Practices
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February 2009
2009
World Grains Production and Utilization
Stocks
2300 Production
1600
1500
Utilization
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Source: FAO
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February 2009
2009
3000
2500
2000
1500
1000
500
0
2

200
160
120
80
40
World Fertilizer Demand Forecast : 1985/86 – 2012/13
129
Mt Nutrients
137
1985-2012 2007-2009
130
137
1995-2005 : 1.9% pa p
1995-2009 : 2.3% pa
154
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
175
180
169
165 171
0
1985 1990 1995 2000 2005 2010
Source : IFA Agriculture Committee
Regional Fertilizer Consumption Annual Variations
2007 2007-2008 2008-2009 2009 (%)
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
8%
6%
4%
2%
0%
-2%
-4%
-6%
-8%
-10%
2008 vs 2007
-1.5%
WE CE EECA NA LA AF WA SA EA OC World
2009 vs 2008
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
2.8%
WE CE EECA NASource LA : IFA Agriculture AF Committee WA SA EA OC World
194
3

100%
95%
90%
85%
80%
75%
Overview of 2008 : Supply
• Bullish expectations : Record first-half : sales and production
• High g historical operating p g rates
• Export policies : China and other exporting countries
• Major slow-down in demand by 3Q08 : lower production and trade in 2H08
• Full pipeline systems in several countries : Stock carry-overs in key
importing countries
• Capacity developments
Limited for N, P and K in key exporting countries
Still expanding in China and West Asia
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Fertilizer Industry Operating Rates : 2000 - 2007
Rate in % : Production over Operating Capacity
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Nitrogen
Phosphate
2000 2001 2002 2003 2004 2005 2006 2007
Source : IFA PIT Committee
Potash
4

7
6
5
4
3
2
1
0
China Fertilizer Exports and Tariffs : 2007 - 2008 - 2009
Urea : 30%
DAP : 20%
Urea : 35 - 135% - 185%
DAP : 35 - 135% - 170%
Urea : 10%
DAP : 10%
110%
110%
10%
10%
110%
110%
Urea : 10%
DAP : 10%
D-07 J-08 F M A M J J A S O N D-08 J-09 F M A M J J A S O N D-09 J-10
Mt product 2007 2008 e
3
2
1
0
-1
-2
-3
-4
Mt product
Urea DAP MAP
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Major Import Changes : 2008 over 2007
15%
% : India’ s share of global trade in 2008
20%
50%
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
IIndia di WWorld ld
Potash Urea DAP Sulphur
5

Fertilizer Products Historical Prices : Dec 2006 - Jan 2009
US $/tonne
1400
1200
1000
800
600
400
200
20 $
18 $
16 $
14 $
12 $
10 $
8 $
6 $
4 $
2 $
0
12/06 3/07 6/07 9/07 12/07 3/08 6/08 9/08 12/08
Sources : BSC-FertilizerWeek; Fertecon; ICIS
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Natural Gas Prices Short Short-Term Term Trends : Nov 2008
US$ / MMBtu
0 $
J-06 A J O J-07 A J O J-08 A J O J-09 A J O
Sources : Efma, Nymex, Azotecon, IFA members in Ukraine and China
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Potash, Vancouver
DAP, Tampa
Urea, Arab Gulf
Ammonia, Yuzhny
Sulphur, Vancouver
EEurope
Ukraine
USA
China
Russia
6

180
160
140
120
100
80
60
40
20
0
Mt ammonia
145 145.22
Alaska
0.0
World Ammonia Production and Trade
19.0
147 147.6 6
19.4
2005 2006 2007
Source : IFA PIT Committee
154.3 154.3
19.2
2008 e
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Global Seaborne Ammonia Trade : 2008e
Carribeans
4.9
Mt NH3
Ventspils: 1.2
Yuzhny: 3.3
West Asia
2.5
Source : IFA PIT Committee
SEA
11.8 8
Oceania: 0.3
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February 2009
2009
18.6
Production
Exports
7

160
140
120
100
80
60
40
20
0
Mt urea
129.4
Country
Lithuania
Iran
Iran
Egypt
Nigeria
New Merchant Ammonia Capacity
Project
Achema
Ghadir I & II
Razi III
EBIC
Notore
2007 2008
150
Kt product
2009
80 80
680
-150
700
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
50
Sub-total + 230 + 680 + 680
135.3
Source : IFA PIT Committee
World Urea Production and Trade
144.1
29.7 31.8 36.4
145.2
2005 2006 2007 2008 e
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
32.5
Production
Exports
8

7
6
5
4
3
2
1
0
Exporters
Main Urea Trade : 2007 - 2008e
Qatar
Oman
Mt urea
2007 2008 e
Source : IFA PIT Committee
7
6
5
4
3
2
1
Importers
15 15th 15 15th th AFA AFA Int'l Int'l Fertilizers Fertilizers Forum Forum & & Exhibition Exhibition - Cairo - February 2009
2009
0
Australia
Nigeria
Peru
Turkey
Main Urea Capacity Changes : 2008 - 2009
Kt urea
2008 2009
Iran 660 1 075
Egypt 660 -
Saudi Arabia -330 -
Nigeria - 500
Oman - 1 075
Lithuania - 320
France - 350
China 2 500 3 500
World Capacity 166 300 175 700
Net Position + 8 700 +9 400
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Mt urea
9

World Phosphates Production and Trade : 2007 and 2008e
Processed
Phosphates
Phosphoric
Acid
Phosphate
Rock
3,0
2,0
1,0
0,0
-1,0
-2,0
-3,0
Production
2008
2007
0 50 100 150 200
Mt P 2O 5
Mt product
Processed
Phosphates
Phosphoric Acid
Phosphate
Rock
Source : IFA PIT Committee
Trade
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Major MAP-DAP MAP DAP Importers / Exporters
2007 2008
Brazil India
Source : IFA PIT Committee
Pakistan
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
2008
2007
0 10 20 30 40
China
10

Main Phosphoric Acid Capacity Changes : 2008 - 2009
Kt P 2O 5
2008 2009
Morocco / Merchant 370 380
Mexico 265 + 265
Viet Nam - 160
China 1 900 700
World Capacity 45 800 47 200
Net Position + 2 800 +1 400
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Main Processed Phosphates Capacity Changes 2008 - 2009
2008
2009
Mt P 2O 5
0.6 + 0.6 Mt
+ 0.3 Mt
0.28 Mt
+0.15 Mt
MAP DAP
2008 2009 2008 2009
Net additions + 1.4 + 0.4 + 3.5 + 1.0
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
3.3 + 0.7 Mt
+ 0.3 Mt
11

60
50
40
30
20
10
0
Mt MOP
54.3
World MOP Production and Trade
41.9
48.8
38.5
55.4 54.5
2005 2006 2007 2008
Source : IFA PIT Committee
45.0
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
MOP Capacity Projects : 2007 - 2009
Kt MOP 2007
2008 2009
Silvinit 5 000 5 000 5 280
Belaruskali 9 100 9 100 9 300
Mosaic (Colonsay) 9 900 9 900 10 200
Dead Sea 3 700 3 700 3 950
SQM 650 650 850
China 3 200 3 400 3 600
31 550 31 750 33 200
+ 200 + 1 430
World 66 200 66 400 67 800
Source : IFA PIT Committee
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
43.0
Production
Exports
12

150
140
130
120
110
100
90
45
40
35
30
25
20
15
10
5
0
129.6 : Supply
World Supply / Demand Balances : 2007 2007- 2009
Nitrogen : N (Mt N)
134.2
139.4
126.9 : Sales 129.4 Demand
133 : + 1.6%
2007 2008e 2009f
Phosphoric Acid : P 2O 5 (Mt P 2O 5)
36.9
39.4
36.3 35,2
40.6
Demand
36,1 : +3%
2007 2008 2009
170
160
150
140
130
120
110
100
90
40
35
30
145.1 : Supply
Urea (Mt urea)
150.4
Sales
144 Mt and 145.2 Mt
159.2
2007 2008e 2009f
34.7
Sources : IFA Agriculture and IFA PIT Committee 2008
25
20
15
10
Potash : K 2O (Mt K 2O)
36.1
32.3 30.3
15th AFA Int'l Fertilizers Forum & Exhibition - Cairo - February February 2009
2009
Prospects for 2009
5
0
Demand
154.8 : +5.4%
37.4
Demand
31,0 : +2.3%
2007 2008 2009
The current economic situation impacts world agriculture and fertilizer markets in several ways:
1. Farmers don’t want to invest in inputs/ fertilizers until the cost-benefit ratio improves.
2. Access to credit is difficult in many y countries.
3. Consumers might return to more “basic” diets with more grains instead of meat, fish, fruits , etc.
4. Economics of biofuels might be threatened if crude oil prices continue to contract.
5. World agricultural output in 2009 might be lower than in 2008.
6. Global fertilizer demand has the potential to recover by fertilizer year 2009/10.
Current supply and demand balances are driven by a drop in demand, not a surge of capacity:
1. 2009 Volatile market conditions and lack of visibility (energy; credit crunch; export measures).
22. Sales prospects: Firm in domestic markets; Limited trade opportunities
opportunities.
3. Strong reactivity: Production curtailments; Manage high cost inventories.
4. Fertilizer trade patterns: Domestic input costs; Import substitution; Product arbitrage.
5. Capacity projects: start-up delays and medium-term postponements.
15 15th 15 15th th AFA AFA Int'l Int'l Fertilizers Fertilizers Forum Forum & & Exhibition Exhibition - Cairo - February 2009
2009
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