global fertilizer supply/demand five-year market outlook (2012...
TRANSCRIPT
Global Fertilizer Supply/Demand
Five-Year Market Outlook (2012-2017)
Magnus Berge
2º Congresso Brasileiro de Fertilizantes
São Paulo, August 27, 2012
2
Global Market Overview
Supply, Demand, Trade and Prices
Nitrogen Market Outlook
Phosphates Market Outlook
Potash Market Outlook
Outlook for the Brazilian Market
Conclusions
CRU International
Presentation Outline
3
Global Market Overview
4
Fertilizer Demand
million mt nutrient
0
5
10
15
20
N P K
0
5
10
15
20
N P K
0
5
10
15
20
N P K
0
5
10
15
20
N P K
0
10
20
30
40
50
N P K
Brazil
USA
EU
India
China
China 28%
India 16%
USA 12%
EU 10%
Brazil 6%
ROW 28%
>70% fertilizer
consumption is in
China, India,
USA, EU and
Brazil
5
Demand Drivers
Changing diets
Better nutrient balance
Rising population
Non-food crops
Crop prices
Fertilizer prices
Tactical buying
Weather patterns 0 50 100
US
A
Chin
a
Bra
zil
India
Indexed to USA
Soybeans Rice Corn
Fertilizer is widely
under-applied and
inefficiently applied
in developing
economies poor
yields and high
growth potential
SHORT
TERM
LONG
TERM
6
Trends in N, P & K Demand – 2007-2012 (million mt)
125
130
135
140
145
150
155
160
20
07
20
08
20
09
20
10
20
11
20
12
Urea
0
5
10
15
20
25
30
35
20
07
20
08
20
09
20
10
20
11
20
12
DAP
0
10
20
30
40
50
60
20
07
20
08
20
09
20
10
20
11
20
12
MOP
7
Supply & Demand Balances for Key Crops: Corn & Soybeans
8
10
12
14
16
18
20
650
700
750
800
850
900
950
ST
U in
%
milli
on
mt
CORN
Production Consumption STU
10
12
14
16
18
20
22
24
26
28
30
100
120
140
160
180
200
220
240
260
280
300
ST
U in
%
milli
on
mt
SOYBEAN
Production Consumption STU
8
Fertilizer Affordability Index
50
100
150
200
250
300
350
400
Jan
2006 =
100
Index of Fertilizer Prices
Index of Crop Prices
Correlation: 81%
9
CRU’s Crop Price Index Forecast (2000=100)
60
110
160
210
260
310
360
Export Price Index (2000=100) Wheat Corn Soybeans
Forecast
10
Supply, Demand, Trade and Prices
Nitrogen Market Outlook
Phosphates Market Outlook
Potash Market Outlook
11
N Fertilizer Use by Main Regions - 2010
Europe + FSU
9%
Americas 22%
South Asia 24% E Asia
37%
SE Asia + Oceania
4%
Other 4%
12
N Fertilizer Use by Crop – 2010
Wheat; 17%
Rice; 16%
Corn, 17% Other Coarse Grains; 5%
Soybeans, 1% Oil Palm; 1%
Other Oilseeds; 4%
Cotton; 4%
Sugar Crops; 3%
Fruits & Veg.; 16%
Other Crops; 16%
13
Urea Supply/Demand Balance, 2000-2017
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
50
100
150
200
250
300
Millio
n m
t u
rea
Supply Demand Utilisation
14
Urea Capacity Forecast to 2017 (million mt)
100
120
140
160
180
200
220
240
260
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Million mt
15
Urea Demand Forecast to 2017 (million mt)
100
110
120
130
140
150
160
170
180
190
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Million mt
16
Urea Trade Forecast to 2017 (million mt)
20
25
30
35
40
45
50
55
2010 2011 2012e 2013f 2014f 2015f 2016f 2017f
Million mt
17
Crude Oil and Urea Prices, History and Forecast
0
20
40
60
80
100
120
0
50
100
150
200
250
300
350
400
450
500
Oil price Urea price index
Brent Crude Oil, $/bbl Urea, Black Sea FOB price index (2000=100)
18
Urea Price Forecast Indices, Major Benchmarks
2000-2017 (2000=100)
0
100
200
300
400
500
600
20
00
=10
0
Black Sea Prill, FOB Middle East Granular, FOB NOLA Granular, FOB
19
Supply, Demand, Trade and Prices
Nitrogen Market Outlook
Phosphates Market Outlook
Potash Market Outlook
20
OCP, 5%GCT, 2%
Mosaic, 11%
PCS, 2%CF, 2%
Other USA, 2%Vale, 3%
Ma'aden, 4%
IFFCO, 4%PhosAgro,
3%YTH, 5%
Wengu, 3%
Kailin, 3%Other
China, 25%
ROW, 27%
Granulation capacity by major producer in 2011
21
Over 30% of annual production is traded…
22
The short term forecast is dominated by India...
1
1. Dec 2011: Chinese export policy tightened
2. Q1/2 2012: Production difficulties continue
3. May 2012: OCP secures Phos Acid export
contract at $885/mt CFR
4. May 2012: PhosChem DAP contract agreed at
$580/mt CFR
5. June 2011: Chinese producers hold out and
secure $580/mt contract
23
Is anyone else able to pick the slack? Brazil!
0
10
20
30
40
50
60
1977 1982 1987 1992 1997 2002 2007 2012 2017
Bra
zilia
n c
rop
are
a, m
illio
n h
ecta
res
Sugar Soyabeans Corn
24
… which will push result in Brazilian P demand growth of 5% CAGR 2011-2017
25
On the supply side, China has driven global production growth over the past decade…
26
… and exports are under pressure
DAP DAP
MAP
TSP
SSP
NPs
NPKs
DAP
MAP
TSP
NPs
30% 30%-135% 110% 110% 110% 110% 110% 110%
DAP
MAP
TSP
DAP
MAP
TSP
DAP
MAP
DAP
MAP
DAP
MAP
DAP
MAP
27
… therefore limiting future production growth
28
Where is new supply going to come from?
OCP
Eurochem
Meleuzskie
GCT
Ferphos
Ma’aden
Vale
Copebras
Pequiven
JIFCO
IFFCO
Paradeep
Xiangfeng
Yidu Xingfa
Vinachem
29
The outlook for prices: bulls and bears
29
Bearish factors: Short/medium term trends:
• Indian import are under threat (high prices, reduced subsidies, weak rupee);
• Anticipation of new supply ramping up in MENA (Ma’aden, OCP);
• Anticipation of existing supply returning to production in 2012/13 (Tunisia, Egypt);
• Chinese trade policy could promote additional DAP/MAP supply, at lower prices.
Long term trends:
• Further capacity growth expected in MENA over long term, could flood market.
Bullish trends: Short/medium term trends:
• Agricultural markets remain relatively tight (corn, soybean);
• Willingness of producers to cut production (Mosaic, PhosAgro, OCP);
• Continued technical difficulties at Ma’aden’s operations;
• Continued strong P demand in Latin America over short term.
Long term trends:
• Higher cost structures (opex & capex);
• Continued demand growth.
30
FOB TAMPA DAP Price Index forecast: 2010-2017 (2010=100)
95
100
105
110
115
120
125
2010 2011 2012 2013 2014 2015 2016 2017
Pri
ce In
de
x, 2
01
0=1
00
31
Supply, Demand, Trade and Prices
Nitrogen Market Outlook
Phosphates Market Outlook
Potash Market Outlook
32
World Potassium Chloride Capacity
1 9 3
1
3 12
10
11
6 5
5
7 5
4
2
8
0 2 4 6 8 10 12 14
PotashCorp
Uralkali Mosaic
Belaruskali ICL
K+S
Arab Potash
QSL Potash
Agrium
SQM
Vale
Intrepid
Other
2011 Capacity (million mt/y)
12
11
10
9 8 7 6 5 4 3 2 1
33
VALE
Rio Colorado ProjectUS$5.9bn4.35m t/y
Start-up end-2014Ramp-up to 2021
K+SLegacy Project
C$3.25bn2.86m t/y
Start-up 2015Ramp-up to 2023
EUROCHEM
Gremyachaya ProjectUS$3.4bn
2.30m t/y (Phase I)2.30m t/y (Phase II)Start-up end-2014Ramp-up to 2017
EUROCHEM
Palaschersk ProjectUS$2.0bn
2.00m t/y (Phase I)Phase II pending approval
Start-up 2016Ramp-up to 2019
New Potash Mines Under Construction
34
Worldwide Capacity & Production Trend (million mt)
0
10
20
30
40
50
60
70
80
90
100
mill
ion
mt
KC
l
North America CIS ROW Global capacity
35
Forecast of Global KCl Deliveries to 2017
China China China China China China China
USA USA USA USA USA USA USA
Brazil Brazil Brazil Brazil Brazil Brazil Brazil India India India
India India India India
SE Asia SE Asia
SE Asia
SE Asia SE Asia
SE Asia SE Asia ROW
ROW
ROW
ROW ROW
ROW ROW 55,1
52,6
57,1
60,9 62,9
64,9 66,9
0
10
20
30
40
50
60
70
2011 2012 2013 2014 2015 2016 2017
milli
on
mt
36
Recent & Forecast KCl Deliveries – Central & South America
0
2
4
6
8
10
12
14
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
KC
l d
eliv
eri
es (
milli
on
mt)
Brazil Other
37
1
1. India still making imports under 2011/12 fiscal
year contract
2. China has imported strongly in H1 2012. New
contracts may not be signed until Q4
3. US has been hit by severe drought, potash
imports affected but largest corn planted-area
in decades to lead to spring demand rebound
4. Brazil has been importing at over 1m
mt/month over the last two months but
producers unable to raise prices
The short term forecast
38
The outlook for prices: bulls and bears
38
Bearish factors: Medium term trends:
• Risk of serious over-capacity developing over the next five years, despite recent news that BHP Billiton and Vale are postponing final approval for projects.
• Concerns that producers will continue to push to maximize prices, hampering demand growth.
• India remains a major concern, with consumption at least 30% below normal levels.
Bullish trends: Medium term trends:
• Although some dilution of pricing power is expected but producers will continue manage production to protect prices
• There remains significant scope for demand growth in some markets: Brazil, India, China and SE Asia
• Crop prices are expect to remain high by historical standards, supporting potash prices
39
KCl Annual Average Price Index Forecast to 2017 (2010=100)
95
100
105
110
115
120
125
130
135
140
2010 2011 2012 2013 2014 2015 2016 2017
Van
co
uve
r/P
ort
lan
d n
etb
ac
k (
201
0=
100
)
40
Brazilian Market Outlook
41
Brazil Yield Development (Main Crops)
0
10
20
30
40
50
60
70
80
90
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
5,0
Suga
r C
ane
in t
on
ne
s p
er
he
ctar
e
Co
rn &
so
yab
ean
s in
to
nn
es
pe
r h
ect
are
Soyabeans Corn Sugarcane
42
Brazilian main Crop Area & P2O5 K20 Consumption (2012-2017)
0
1
2
3
4
5
6
7
0
10
20
30
40
50
60
Nu
trie
nt
Dem
an
d in
millio
n m
t
Millio
n h
ecta
res
Corn Soyabeans Sugarcane P2O5 Demand K2O Demand
43
Conclusions • Price projections corn, soybeans and wheat to stay well
above first half of the 2000s on tighter stocks and ever-
rising demand for food
• Urea trade to see steady growth over next five years
rising to over 50 million mt by 2017 – prices to stay
above post 2008-crisis levels
• Phosphate China production to stabilise over next five
years; Brazilian P2P5 demand to support market; DAP
pricing to rebound from 2013
• Potash weakening supply/demand balance to put
downward pressure on prices over the next five years
44
CRU International
45
MARKET OUTLOOK SERVICES Ammonia Urea Phosphate Rock Phosphoric Acid, DAP, MAP & TSP Potassium Chloride Sulphur Sulphuric Acid
COST SERVICES Nitrogen Fertilizers Potassium Chloride Phosphate Rock Phosphate Fertilizers
CRU International
46
FERTILIZER WEEK ONLINE Urea Nitrates & Sulphates Ammonia Phosphates Potash Sulphur Sulphuric Acid
CRU International
SHORT TERM FORECASTS Urea DAP/MAP Potash
47
CRU EVENTS Sulphur 2012 - October 2012 - Berlin,
Germany
Fertilizer Latino Americano - January 2013 - São Paulo, Brazil
Nitrogen + Syngas 2013 - March 2013 - Berlin, Germany
Phosphates 2013 - March 2013 - Monte Carlo, Monaco
CRU International
Magnus Berge Managing Editor - Fertilizer Week
+44 (0)20 7903 2422 [email protected]
Por sua atenção, obrigado!
Márcio Goto Regional Manager
+55 11 5051 8124 +55 11 9972 64466 cell [email protected]
www.crugroup.com