high crop prices: positive for fertilizer demand – what ... tore moe yara 23.11.12.pdf · 10...
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High crop prices: Positive for fertilizer demand – what about supply?Dag Tore Mo, Head of Market Intelligence
Urea57%
UAN5%
AN/CAN8%
NPK9%
DAP/MAP6%
Ammonia4%
Other11%
MOP/SOP72%
NPK23%
Other5%
DAP/MAP52%
NPK21%
SSP13%
TSP6%
Other7%
Key global fertilizer products
103 million tons
27 million tons 40 million tons
Nitrogen N
Potash K2O Phosphate P2O5
Source: IFA 2010 (nutrient totals) and 2008 (product split)
1 800
1 900
2 000
2 100
2 200
2 300
2 400
1997 1999 2001 2003 2005 2007 2009 2011 2013F0%
5%
10%
15%
20%
25%
30%
35%
1997 1999 2001 2003 2005 2007 2009 2011 2013F
Consumption
Production
Source: USDA November 2012
A third year of lower grain stocks, very
supportive
68 days inventory
Million tons
Main agricultural commodity prices at historic
high levels
050
100150200250300350400
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct
USD/t
Wheat (HRW US Gulf)
0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct
USD/t
Rice (Thailand)
050
100150200250300350
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct
USD/t
Corn (US Gulf)
Source: World Bank, November 2012
0
100
200
300
400
500
600
700
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TD12 Oct
USD/tSoybeans (cif Rotterdam)
Average prices 2002- 2011
0
100
200
300
400
500
600
700
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012TD
Index2000 = 100)
Urea fob Black Sea
DAP fob Tampa
MOP fob Vancouver
Oil Brent
Wheat fob US Gulf
Source: International publications
Fertilizer prices not very different from other
commodities
y = 1,3164x - 9,6469
R² = 0,5665
100
200
300
400
500
600
700
800
900
100
150
200
250
300
350
400
450
500
Ure
a f
ob B
lack S
ea
Wheat fob US Gulf
Relationship between wheat and urea prices ( from 2003 )
Main fertilizer commodity prices
Source: International publications
0
100
200
300
400
500
600
700
Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12
USD/mt Urea fob Black Sea DAP fob Tampa MOP fob Vancouver
Profitability of investment in mineral fertilizers
� The investment in nitrogen fertilizer is highly profitable for growers
� Fertilizer investment: 261 USD/ha
� Net return: 1,745 USD/ha
� Net return > 6 x investment
0,0
1,0
2,0
3,0
4,0
5,0
6,0
7,0
8,0
9,0
10,0
0
500
1 000
1 500
2 000
2 500
3 000
0 50 100 150 200 250 300
Yield, ton/haIncome USD/ha
Fertilizer application, kg N/ha
Source: Winter wheat yield data: Long term trial, Broadbalk, Rothamsted (since 1856).
Yield response (monetary value) to N fertilizer rate
Apparent nitrogen consumption ex. China
75
80
85
90
95
100
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
mil
lio
n t
on
sn
itro
ge
n
Source: IFA
The trend from 2001-2011 shows a growth rate of 2.1%/year
Standard deviation of annual growth rates: 4%-points
10 largest ammonia producers in 2011
0,0
10,0
20,0
30,0
40,0
50,0
60,0
Ch
ina
Ru
ssia
Ind
ia
US
A
Ind
on
esia
Tri
nid
ad
Uk
rain
e
Ca
na
da
Eg
yp
t
Sa
udi
Ara
bia
mil
lio
n t
on
s a
mm
on
ia
2010 2011
Source: IFA
Main urea flows 2011
10.91.0
0.84.7
2.3 1.7 0.9
1.6
1.5
0.9
Source: IFA 2011
Million tonnes
0.8
0.7
2.2
0.8
1.8
Net urea export from China
0
1000
2000
3000
4000
5000
6000
7000
8000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
kt
pro
duct
2009 2010 2011 2012
300
350
400
450
500
550
600
650
700
1 750 1 950 2 150 2 350 2 550
Fob China
Domestic price ex works, RMB/t
Chinese export tax 1 Jul – 1 Nov
Lower Chinese urea export price in 2012
* China Fertlizer Market Week
1 600
1 700
1 800
1 900
2 000
2 100
2 200
2 300
2 400
2 500
Jan Apr Jul Oct
RMB/t
Domestic urea price in China
2011
2012
2011
2012
Source: Fertecon urea update October 2012. Consumption data source is IFA. Previous update in brackets.
Year Driving regionsUrea capacity growth relative
to nitrogen capacity
World Excluding China World Excluding China2011 China 36%
Pakistan 24%Pakistan 37%
Iran 18%1.2% (1.3%) 1.2% (1.3%)
2012 China 60%
Qatar 14%
Qatar 34%
Vietnam 20%
3.5% (4.1%) 2.2% (2.1%)
2013 China 63%
Algeria 14%
Algeria 38%
UAE 18%
4.4% (2.7%) 2.6% (3.1%)
2014 China 45%
Egypt 13%
Egypt 25%
Algeria 16%
1.7% (1.0%) 1.5% (1.2%)
2015 China 42%
Saudi Arabia 9%
Saudi Arabia 15%
Brazil 14%
2.6% (1.2%) 2.5% (1.9%)
Gross annual addition 2011-2015 ~2.0%
Assumed annual closures ~0.5%
Net annual addition 2011-2015 ~1.5%
Trend consumption growth from 2001 2.5% 2.1%
Projected nitrogen capacity additions outside
China in line with historical consumption growth
Source: Fertecon urea updates
Continued project delays
7,5
5,2
2,5
2,5
1,2
0,4
0
1
2
3
4
5
6
7
8
2012Oct 11 est.
2012Oct 12 est.
2013Oct 12 est.
Million tonsAdditional urea capacity
Startup in UAE in Jan 13
Startups in Algeria in Jul 12, Jan 13 and Jul 13
1 new site in Egypt from Jul 13
Fertecon assumptions:
0
10
20
30
40
50
60
70
80M
t Roc
k
2011 2010
Ten largest phosphate rock producers 2011
Source: IFA
Record net phosphate exports from China
0,0
0,5
1,0
1,5
2,0
2,5
3,0
3,5
4,0
4,5
2005 2006 2007 2008 2009 2010 2011
Million tons P2O5
DAP MAP TSP Other NP
Source: IFA, BOABC for 2011. ( Assuming 25% P2O5 in “Other NP”, included from 2009 )
80
100
120
140
160
180
200
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mt R
ock
Excluding China
In 2011 global phosphate rock production
increased by 3.8% to 191 million tonnes
2001-2011 annual growth rate 2.1% per year
Source: IFA
Main DAP/MAP/TSP flows 2010 (Mt P2O5)
1.17
Source: IFA
0.24
1.28
0.34
0.39
0.21
0.19
0.490.25
0.10
10
15
20
25
30
35
40
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Mt K
2O
In 2011 global potash production increased by
8.2% to 34.3 million tonnes K2O
2001-2011 trend growth rate 1.0% per year
Source: IFA
0
2
4
6
8
10
12M
t K2O
2011 2010
Ten largest potash producers 2011
Source: IFA
Main potash flows 2011 (Mt K2O)
3.7
Source: IFA
1.9
0.5
0.7
2.1
2.03.6
3.7
0.9
0.7
1.7
1.4
0
100
200
300
400
500
600
700
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012
USD/mt
Rock fob Morocoo
MOP fob Vancouver
Source: International publications
P and K – decades of surplus capacity gone
Phosphate rock reserves are not limited
(numbers are billion tons)
Source: CRU
Potash Exploration Activity, no lack of resources, it is a question of price
UNITED STATES
American Potash
IC Potash (SOP)
Mesa Uranium
NA Potash Developments
Passport Potash
Potash Minerals
Potash Ridge (SOP)
Prospect Global Resources
Red Metal
Sirius Minerals
Universal Potash
ARGENTINA
Allana Potash
Dajin Resources
Lithium Americas Corp
Lithium One
Marifil Mines
Orocobre
Rincon Lithium
Rodinia Lithium
BRAZIL
Verde Potash
Brazil Potash Corp.
Lara Exploration
Petrobras
Aguia Resources
Redstone Resources
Rio Verde Minerals
Vale
Western Potash
ERITREA & ETHIOPIA
Allana Potash
BHP Billiton
Ethiopian Potash Corp
Ethiopotash
NGEx Resources
Nova Potash
Sainik / IFFCO
South Boulder MinesAUSTRALIA
Sirius Minerals
Highfield Resources
Potash West
Rum Jungle Resources
South Boulder Mines
WPG Resources
THAILAND & LAOS
ASEAN Potash Mining
Asia Pacific Potash (Ital-Thai)
Mingda Thailand
Sinoagri Mining
Sinohydro Mining
Viet-Lao Salt & Chemicals
Zhongliao Mining
Kaiyuan Potash
AsiaBaseMetals
RUSSIA (URALS)
Acron
EuroChem
CONGO
MagMinerals
Congo Potash Co.
Elemental Minerals
NEWFOUNDLAND &
NEW BRUNSWICK
Atlantic Potash Corp.
Red Moon Potash
PERU
GrowMax Agri Corp
Salmueras Sudamericanas (SOP)
KAZAKHSTAN
Fortis Mining
Satimola
TURKMENISTAN
Turkmenkhimiya
SASKATCHEWAN
BHP Billiton
Canada Potash Corp.
Encanto Potash
Karnalyte Resources
North Atlantic Potash (Acron)
Western Potash
Vale
MONGOLIA
General Mining Corp.
ALBERTA
First Lithium Resources
Grizzly Discoveries
Pacific Potash Corp.
Softrock Minerals
Universal Potash
MANITOBA
BHP Billiton
Western Potash
UNITED KINGDOM
Sirius Minerals (SOP)
BOLIVIA
Comibol
Ballpark investment costs - Greenfield
� Potash– 2 billion USD for a 1 million ton/year potash mine, USD2000/annual ton
– Time from start to mine output: 8-10 years
� Phosphate rock– 1.2 billion USD for a 2 million ton/year mine, USD600/annual ton
– Time from start to mine output: 6-10 years
� Ammonia/Urea– 1.5 billion USD for a 1 million ton/year urea plant, USD1500/annual ton
– Time from start to production: 4-6 years
Source:Department of Natural Resources Canada, British Sulphur(Fosfertil), Stamicarbon