Outlook for International Prices of Fertilizers, Raw Materials and ...

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CONCLUSIONS - SUPPLY Higher costs of new plants for all products – a new 1 million tonne/year facility for ammonia/ urea, phosphate and potash all cost at least $1 billion This creates a higher base cost for new producers There have been fundamental changes in the cost of natural gas in the US which suggests the existing US industry will remain competitive going forward European gas prices could go the same way – protecting the industry there. Gas pricing is becoming more global due to the influence of LNG The cost differential between existing plants in high gas cost areas and new plants in low cost areas has reduced – and in some cases disappeared. FERTECON /FAI Hyderabad December 2009 87 CONCLUSIONS - PRICE There has been some recovery for nitrogen – both ammonia and urea, but increased supply limits the upside on prices Phosphate prices could remain under downward pressure in the near term but market fundamentals could strengthen in 2010 until supply increases 2011 onwards Potash supply/demand balance will correct as demand recovers, but increased supply will mean upside on prices is limited. FERTECON /FAI Hyderabad December 2009 88 44
THE OUTLOOK FOR INDIA India has seen substantially lower prices for imported ammonia, urea and phosphate since August 2008 Ammonia prices have increased, but the upside is limited due to new supply Increased supply, particularly from the Middle East should keep urea prices moderate, and we could see some lower prices from 2011. Potash prices have ended up higher than before the boom, but additional supply should mean further increases unlikely in the medium term. However, the need for new investment will increase costs – and thus prices. India will benefit from low sulphur prices in medium term, although there could be some short term increases Phosphate rock and phosphoric acid prices have been brought back back into line with DAP prices. DAP looks weak once Ma’aden in Saudi Arabia comes in stream in 2011 There is likely to be increased interest from countries with fertilizer raw material resources – natural gas, phosphate rock and potash – for joint ventures with major end users such as India – particularly in finance can be made available FERTECON /FAI Hyderabad December 2009 89 A WINDOW OF OPPORTUNITY India is unlikely to face again the high prices seen in 2008. These stretched the subsidy budget almost to breaking point and provided the initial stimulus for reform. Although those pressures are now reduced, the momentum for subsidy reform has become unstoppable. The more moderate prices expected in the near and medium term provide a window of opportunity for the industry and government to move Indian fertilizers into a new era of sustainable pricing within a structure that encourages enterprise and development whilst protecting the interests of Indian farmers. FERTECON /FAI Hyderabad December 2009 90 45
Page 1 and 2: Outlook for International Prices of
Page 3 and 4: WHAT HAPPENED? The financial crisi
Page 5 and 6: POTASH PRICES 1000 US$/tonne fob PO
Page 7 and 8: LONG TERM PERSPECTIVE 1000 NH3 - US
Page 9 and 10: DEMAND DRIVERS POPULATION - more m
Page 11 and 12: NUTRIENT BALANCES N P K 2020 2015 2
Page 13 and 14: PHOSPHATE USE BY CROP 16% 3% 4% 5%
Page 15 and 16: CORN PRICES 8 7 6 US$/bushel receiv
Page 17 and 18: AGRICULTURE OUTLOOK Strong growth
Page 19 and 20: CROP PRICES AND FERTILIZER PRICES
Page 21 and 22: DOMINATION OF ASIA MAJOR PHOSPHATE
Page 23 and 24: SHORT TERM DEMAND 125 Milllion tonn
Page 25 and 26: SUPPLY FACTORS Supply management ke
Page 27 and 28: NITROGEN SUPPLY Many suppliers - F
Page 29 and 30: WORLD DEMAND FOR AMMONIA BY END-USE
Page 31 and 32: WORLD: UREA PRODUCTION 2007 Total 1
Page 33 and 34: NITROGEN FEEDSTOCK Outside o
Page 35 and 36: POTENTIAL PHOSPHATE PROJECTS - ROCK
Page 37 and 38: POTASH SUPPLY Supply very concentr
Page 39 and 40: POTASH INVESTMENT Most of the ne
Page 41 and 42: UREA PRICES - MEDIUM TERM 600 US$/t
Page 43: CONCLUSIONS Moderate prices expecte

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