16th AFA Int’l Fertilizers Forum & Exhibition February 2 - 4, 2010 Cairo Semiramis Intercontinental Hotel, Egypt
Outlook for World Fertilizer Demand, Supply and Supply/Demand Balances
Mr.
Patrick Heffer Director IFA Agriculture Service
France
1/24/2010
OUTLOOK FOR WORLD FERTILIZER DEMAND, SUPPLY AND SUPPLY/DEMAND BALANCES Patrick Heffer and Michel Prud’homme IFA 16th AFA Int’l Annual Fertilizers Forum & Exhibition 2-4 February 2010, Cairo, Egypt
ECONOMIC CONTEXT
1
1/24/2010
World GDP Growth (%) Emerging and developing countries Advanced economies
8 6 4 2 0 -2 1970
1980
1990
2000
2007
2008
2009
2010
World
52 5.2
30 3.0
-1.1 11
31 3.1
China
13.0
9.0
8.5
9.0
USA
2.1
0.4
-2.7
1.5
India
9.4
7.3
5.4
6.4
EU
3.1
1.0
-4.2
0.5
Brazil
5.7
5.1
-0.7
3.5
Russia
8.1
5.6
-7.5
1.5
2010
Source: IMF
Crude Oil Price (US$/barrel)
Brent
2
1/24/2010
GLOBAL AGRICULTURAL SITUATION AND PROSPECTS
World Cereal Production and Utilization (Mt) 2nd largest cereal harvest ever
Source: FAO
3
1/24/2010
World Cereal and Oilseed Production (Mt) Wheat
Coarse Grains
(milled)
2006
592
983
2007
610
2008 (e) Change 2009 (f) Change
Rice
Oilseeds
Total
421
404
2 399
1 077
434
392
2 513
683
1 102
447
395
2 627
+12.0%
+2.3%
+3.0%
+0.7%
+4.5%
676
1 094
435
432
2 637
-1.0%
-0.7%
-2.7%
+9.4%
+0.4% Source: USDA
2009 equals record world cereal + oilseed output of 2008
World Cereal StockStock-to to-Use Ratio
Source: FAO
4
1/24/2010
Evolution of Crop Prices Relative Price Evolution from January 1995 to January 2010
Index: January 1995 = 100
Sources: Financial Times and IMF
GLOBAL FERTILIZER DEMAND OUTLOOK
5
1/24/2010
Short-Term Prospects for Global ShortFertilizer Consumption (Mt nutrients) 180 160 140
K2O P2O5 N
2007/ 08
2008/ 09 (e)
Change
2009/ 10 (f)
Change
2010/ 11 (f)
Change
100.6
99.0
-1.5%
100.6
+1.6%
103.3
+2.6%
P2O5
38.3
34.3
-10.5%
35.4
+3.0%
37.6
+6.2%
K2O
28.7
23.1
-19.8%
22.0
-4.5%
25.0
+13.5%
167.7
156.4
-6.7%
158.0
+1.0%
165.8
+4.9%
N
120 100 80 60 40 20
Total
Source: IFA Agriculture
0
Reminder on reference years: ~1/2 of the world market: January X December X ~1/6 of the world market: April X March X+1 ~2/6 of the world market: July X June X+1
Projected Evolution of Total Fertilizer Demand (Mt nutrients)
Source: IFA Agriculture
6
1/24/2010
Some of the Main Uncertainties Evolution of the financial and economic downturn - crude oil prices - consumer’s (farmer’s) confidence - access to credit
Yield impact of lower P and K application rates - 2009: equals the 2008 record grain + oilseed harvest - prospects for high corn yields in the USA - record wheat yields in France what impact on long-term farmer’s behaviour?
Evolution of the fertilizer:crop price ratio
GLOBAL FERTILIZER SUPPLY SITUATION AND OUTLOOK
7
1/24/2010
World Nutrient Supply Trends (Mt nutrients) 220 210 200
200
Global sales
180 170 2002
198 191
Global production
190
Global demand
2003
2004
2005
2006
2007
2008
2009
Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
World Production Trends (Mt nutrients) 140
Ammonia +1%
120 100 80
Urea +4%
60
Phosphate rock -9% Phosphoric p acid -1% Potash -36%
40 20 0 2005
2006
2007
2008
2009 Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
8
1/24/2010
World Operating Rates Rates in %: production over operating capacity
100% 90% 80% 70% Ammonia Urea
Potash Phosphoric Acid
60% 50% 40%
1995 97
99
01
03
05
07 2009
1995 97
99
01
03
05
07 2009
Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
Exports of Main Commodities (Mt nutrients) 40 35
Urea
30
Sulphur
25
Phosphate rock Ammonia
20 15
Potash
10
DAP Phosphoric acid
5 0 2005
2006
2007
2008
2009
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
Source: IFA PIT
| Source: IFA PIT Committee
9
1/24/2010
Main Changes in Fertilizer Trade (Mt products) 2008 5.2
2009 71 7.1
4.3
53 5.3
5.9 1.2 CHINA POTASH
USA UREA INDIA DAP
Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
Seaborne Ammonia Export Capacity and Trade (Mt NH3) 20
East of Suez
17
16
16
West of Suez
15
Trade
12 8 4 0 2007
2008
2009
2010
2011 Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
10
1/24/2010
Main Urea Capacity Changes (Mt products)
2010 2009 2008 0
2
4
6
8
10 Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
World Processed Phosphates Capacity Changes (Mt P2O5) 1.8
H3PO4
DAP
MAP
TSP
15 1.5 1.2 0.9 0.6 0.3 0.0 -0.3
2008
2009
2010 Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
11
1/24/2010
Main Potash Capacity Changes (Mt K2O)
2010 2009 2008 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
Source: IFA PIT
| Source: IFA PIT Committee
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
World Sulphur Supply/Demand Balance (Mt S) Supply
Demand 49
49
48
55
50
45
45
48
2007
2008
2009
3.3
4.8
2010 6.7
-1.6
Balance
Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
12
1/24/2010
World Nutrient Supply/Demand Balances Supply Demand Mt N 125
2008
Mt P2O5 38
33
2008
Mt urea
137
133
128
152
129
123
157 146
2009
2008
2010
36
35
33
28
2009
149
2009
2010
38
39
Mt K2O
41
39
165
159
2008
2010
28
25
2009
2010
Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA Ag Committee
World Nutrient Supply Trends (Mt nutrients) 220 210
205
200 Global production Global sales Global demand
190 180 2004
2005
2006
2007
2008
2009
2010 Source: IFA PIT
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
| Source: IFA PIT Committee
13
1/24/2010
Prospects for 2010 A recovery in demand and stronger sales prospects Current S/D balances: potentially, high surpluses prevailing in 2009 and through 2010
Limited new capacity outside China and on-going structural changes
Rising volatility of agricultural commodity and energy prices Improving market conditions in 2010 Increases in production and operating rates Higher domestic sales and exports
- A rebound in import demand in Latin America, North America and South-East Asia - Sustained imports in South Asia - Potential improvement in Europe and Oceania - Uncertainties as regards China
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
Conclusion Projections for 2010/11 are very speculative Provided the world economic activity recovers, and the agricultural market fundamentals remain positive, global fertilizer demand in 2010/11 could regain positive growth rates
Global Supply and Demand Outlook for Fertilizers and Raw Materials / Intermediates
14
1/24/2010
For questions/comments: on the demand side: pheffer@fertilizer.org on the th supply l side: id mprudhomme@fertilizer.org
15