2014 GCC Fertilizer Industry Indicators
GCC Fertilizer Industry Indicators 2014
CONTENTS
4
2. Economic contribution of GCC fertilizer Industry
5
1. About fertilizers
3. GCC fertilizer production capacity
4. GCC mainstream fertilizers
7 8
5. Fertilizer nutrients 9 6. Fertilizer intermediates 10 7. Specialty fertilizers 11 8. Capacity utilization 13 9. GCC fertilizer capacity expansion 10. Overview of global ammonia production
15
11. Overview of global urea production 12. Overview of global DAP production
14
17
19
13. Overview of global phosphate rock reserves
20
14. Overview of global sulfur production
21
15. GCC fertilizer trade by country
22
16. GCC fertilizer trade by destination
23
17. Overview of GCC fertilizer export markets
24
18. Employment in GCC fertilizer industry
25
19. Sales revenue 26 20. Future outlook 27
3
GCC Fertilizer Industry Indicators 2014
1. About fertilizers
Humans, animals and plants all need nutrients to survive. Nutrients can be ‘macronutrients’ – which are needed in large quantities – such as nitrogen (N), phosphorus (P), potassium (K), calcium (Ca), sulfur (S), and magnesium (Mg) or ‘micronutrients’ such as zinc (Zn), copper (Cu), iron (Fe), boron (B), and molybdenum (Mo), needed in lesser quantities. Humans consume crop and animal products for nourishment, while crops get most of the nutrients they require from the soil. However, many soils do not provide all nutrients in the quantities needed by the crops. Soil nutrients removed by continuous cropping have to be replaced by the addition of nutrient sources such as fertilizers. A fertilizer is any solid, liquid or gaseous substance containing one or more plant nutrients in a known amount that is applied to the soil or directly to the plant (e.g. on the foliage) or is added to aqueous solutions (as in fertigation) to maintain soil fertility and improve crop development, yield and/or crop quality. The purposes of using fertilizers are identical in temperate and tropical climates: • to supplement the natural supply of soil nutrients and build up soil fertility in order to satisfy the demands of crops with a high yield potential; • to compensate for the loss of nutrients exported by the harvested products or unavoidably leaked to the environment in order to maintain good soil conditions for cropping. Fertilizers are generally classified into two major categories: • organic; • mineral/manufactured.
4
Manufactured fertilizers are classified according to different criteria as follows: 1. Number of nutrients • single-nutrient or straight fertilizers (whether for macronutrients or micronutrients) examples: urea (46-0-0), triple superphosphate (0-46-0), muriate of potash (0-0-60), zinc/iron chelate, boric acid, etc. • multi-nutrient/compound fertilizers with 2, 3 or more nutrients examples: compound fertilizers (15-15-15), diammonium phosphate (18-46-0), monopotassium phosphate (0-47-31), etc. 2. Type of combination • mixed fertilizers or ‘bulk blends’ are physical mixtures of two or more single-nutrient or multi-nutrient fertilizers; • complex fertilizers are products in which two or more of the nutrients are chemically combined (e.g. nitrophosphates, ammonium phosphates). 3. Physical condition • solid (crystalline, powdered, prilled or granular) of various size ranges; • liquid (solutions and suspensions); • gaseous (liquid under pressure, e.g. ammonia). 4. Nutrient release • quick-acting (water-soluble and immediately available); • slow-acting (transformation into soluble form required, e.g. direct application of phosphate rock); • controlled release by coating; • stabilized by inhibitors. The principles of the correct use of nutrient sources, rate, time, and place form the minimum basis of any local nutrient stewardship system. Best management practices must be applied to all of these areas to achieve local economic, social and environmental goals.
GCC Fertilizer Industry Indicators 2014
2. Economic contribution of GCC fertilizer industry
Fertilizers are well known for their contribution to the world’s food supply and account for around 40-60% of the total (Stewart, “The Contribution of Commercial fertilizer Nutrients to Food Production,” in Agronomy Journal 2005, p. 1). In addition, the fertilizer industry provides economic value and jobs. In the GCC, the fertilizer industry is one of the important segments of chemicals and petrochemicals, accounting for almost one third of the industry’s output in terms of volume. Fertilizer plants across the region provide jobs, support networks of suppliers, and generate value. The following are highlights of the GCC fertilizer industry’s socioeconomic contributions in 2014: • The industry directly employed almost 13,000 people. The estimated compensation paid to employees was US$338 million, about 11% of the total for the region’s chemical industry. The purchase of materials and services to support fertilizer manufacturing led to an additional 38,300 jobs along the supply chain. The total contribution in terms of generating earned income is estimated at more than US$1.3 billion, including direct and indirect compensation. The total number of direct and indirect jobs provided exceeded 51,000. Many firms make indirect contributions along the value chain, including suppliers, manufacturers, traders, and service providers. Fertilizer manufacturers pay suppliers, which in turn make payments to others and so on, thereby creating value throughout the economy. GCC fertilizer exports reached 22.9 million tons and were valued at US$ 7.5 billion in 2014. This represents a growth of 7.5% per annum over the past decade.
5
GCC Fertilizer Industry Indicators 2014
3. GCC fertilizer production capacity
The industry is characterized by a high concentration of production and trade. Saudi Arabia and Qatar remain the leading producers in the region, making a contribution of 42% and 26% respectively to the GCC’s total production of fertilizers in 2014. Among the major developments in the GCC fertilizer industry in 2014 was the completion of the new Safco 5 plant in Jubail, Saudi Arabia. This will be the world’s largest carbon capturing plant, compressing around 1,500 tons of raw CO2 per day from glycol plants. The CO2 will then be used to produce urea. In Oman, Takamul Investment Company and Oman Oil Co. (OOC) announced plans to build an ammonia plant with a capacity of 1,000 metric tons per day (mtpd) in Salalah. Given Takamul’s ambition to support the growth of a strong downstream petrochemicals industry in Oman, its ammonia project is thought to be intended to catalyze investments in a chemicals cluster with wider value added.
6
GCC Fertilizer Production Capacity By Country 40 35
40.9 1.1 2.5
CAGR (2004-2014) 7.3% p.a.
37.2
30
Million Tons
The fertilizer segment is one of the largest in the GCC’s chemical industry, representing 28% of its total regional capacity. Over the past ten years, the GCC’s fertilizer production capacity has doubled from 20.2 million tons in 2004 to 40.9 million tons in 2014.
29.0 25 20 15
25.9 20.2 1.0 2.4
1.1 2.3 2.4
1.1 2.4 2.4
4.4 3.4
3.5
3.5
3.3 10
1.1 2.4
26.8
4.4
4.4
5.0
3.1 10.7 9.8
5.6
5.6
5.6
1.1 2.5
4.4
5 9.2
10.9
11.9
12.1
16.3
17.2
2004
2006
2008
2010
2012
2014
Kuwait
Bahrain
0 Saudi Arabia
Qatar
UAE
Oman
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
GCC Fertilizer Industry Indicators 2014
GCC Fertilizer Production Capacity Growth
CAGR (2004 - 2014), % 9.4
Qatar
7.3
GCC Oman
6.8 6.4
Saudi Arabia
4.4
UAE
1.2
Bahrain
Kuwait
0.2
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015 7
GCC Fertilizer Industry Indicators 2014
4. GCC mainstream fertilizers
Mainstream fertilizers are defined as products which are not used as intermediates in the fertilizer industry. They are comprised of urea, DAP, NPK and others.
GCC Mainstream Fertilizer Production Capacity 25
19.5
Urea fertilizer is one of the most widely used nitrogen fertilizers and has a high nitrogen content (46%). It is made from ammonia and carbon dioxide and is relatively easy to handle and store, making it the most important solid nitrogen fertilizer material worldwide. Urea is the largest fertilizer product made in the GCC, with production capacity reaching 15.2 million tons in 2014. Qatar is the largest urea producer in the region and houses the largest single site ammonia and urea production plant, developed by QAFCO. Qatar’s share in the region’s urea output is 37%, up from about 28% a decade ago. Qatar’s global position in urea output increased to 3% in 2014. With extensive reserves of indigenous phosphate rock, Saudi Arabia has started to develop its phosphate fertilizer industry. With a significant volume of diammonium phosphate (DAP) production commencing in Saudi Arabia from 2011, total production capacity was maintained at 3.4 mtpa in 2014. This represents 17% of mainstream fertilizer capacity in the region.
Mi l l i o n T o n s
20
17.2
CAGR (2004 - 2014) 9% p.a.
15
3.5
10.8
0.4
12.2
11.0
3.4
3.4
0.4 0.5
0.4 0.3
0.4 0.5
7.6
9.7
9.7
10.9
12.9
15.2
2004
2006
2008
2010
2012
2014
10
8.4 0.4 0.1
5 0 Urea
Diammonium phosphate (DAP)
NPK
Others
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
Product Name
GCC Production Capacity in 2014 (KT)
Urea
15,196
Diammonium phosphate (DAP)
3,400
NPK
440
Trisodium phosphate (TSP)
200
Urea formaldehyde
104
NPK water soluble
86
Sulfur bentonite fertilizer
30
Sulfur-coated urea (SCU)
24
Total
19,480
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015 8
0.4
GCC Fertilizer Industry Indicators 2014
5. Fertilizer nutrients
In terms of global share, the GCC represented 6% of the world’s total demand for fertilizer nutrients, which is estimated by the International Fertilizer Association (IFA) at 182.7 million tons of nutrients (N+ P2O5+ K2O).
GCC Fertlizer Production By Nutrient Content 12.0
11.2 0.1
10.0
Million Tons
Fertilizers’ main purpose is to provide essential nutrients needed by crops. As the majority of GCC fertilizer production is concentrated around the production of the single nutrient fertilizers ammonia and urea, nitrogen is the main nutrient provided by the GCC. Total nutrient production in the GCC exceeded 11.2 million tons in 2014 and nitrogen represented a lion’s share of 87%.
1.4
9.1 0.1 1.0
CAGR (2004-2014): 10.4% p.a. 8.0 6.0
6.1
5.8
5.8
3.9
5.4
5.5
5.8
8.0
2004
2006
2008
2010
2012
4.2
0.1 0.3
0.1 0.3
0.1 0.3
0.1 0.2
4.0 2.0
9.8
0 Nitrogen (N)
Phosphate (P2O5)
2014
Potash (K2O)
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
GCC Share in World DemandfFor Fertilizer Nutrients in 2014 (Million Tons of Nutrients) Nutrient
World
GCC
GCC share in world
Nitrogen (N)
111.1
9.8
9%
Phosphate (P2O5)
41.5
1.4
3%
Potash (K2O)
30.1
0.1
0.2%
TOTAL
182.7
11.2
6%
Source: IFA Agriculture and Gulf Petrochemicals and Chemicals Association (GPCA), 2015 9
GCC Fertilizer Industry Indicators 2014
6. Fertilizer intermediates
Ammonia is a key intermediate in the production of fertilizers such as urea, ammonium nitrates, ammonium phosphates and compounds. It is the only viable source of nitrogen for the production of large amounts of protein. The nitrogen content of fertilizers improves both the quantity and quality of protein crops. GCC ammonia production capacity reached 11.7 million tons in 2014, which represents 55% of the region’s total production capacity for fertilizer intermediates. Ammonia has seen a very high growth rate of 7.7% per annum over the past decade. Sulfur is an important product for the fertilizer industry, as a plant nutrient and for the processing of phosphate rock to make phosphate fertilizer. The largest sources of elemental sulfur are petroleum refining and natural gas processing at numerous facilities around the world. The GCC’s sulfur production capacity exceeded 8 million tons per annum in 2014, accounting for 37% of the region's fertilizer intermediates capacity. Sulfuric acid is essential for the production of phosphate fertilizers, calcium dihydrogen phosphate and ammonium phosphates. At present, the GCC produces 1.4 million tons of sulfuric acid per annum.
10
GCC Fertlizer Intermediates Production Capacity 25
Million Tons
Intermediate materials which are used to produce mainstream fertilizers are ammonia, sulfur, sulfuric acid, phosphoric acid, and nitric acid.
CAGR (2004-2014) 6% p.a.
21.4 16.7
20
15
15.0 11.9 1.1
10
1.1 6.3
15.7 1.1 7.0
20.0
1.4
1.3
1.2 7.3
8.0
7.2 5.6
5.0
5 5.6
7.4
7.4
8.1
2004
2006
2008
2010
11.1
11.7
0 Ammonia
Sulfur
Sulfuric Acid
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
2012 Other
2014
GCC Fertilizer Industry Indicators 2014
7. Specialty fertilizers
The market for specialty fertilizers in the GCC region is more or less in its infancy, but there are significant opportunities for their production and marketing. Producers and suppliers of specialty fertilizers in the UAE list their production capacity as follows: • • • • • •
NPK water soluble fertilizer capacity - 50,000 metric tons/year NPK granular fertilizer capacity - 40,000 metric tons/year Liquid and suspension capacity – 5,000 metric tons/year Micronutrients and foliar capacity – 2,000 metric tons/year Sulfur coated urea (SCU) capacity - 24,000 metric tons/year Water soluble NPK grades - 36,000 metric tons/year
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GCC Fertilizer Industry Indicators 2014
8. Capacity utilization
Capacity utilization in the GCC’s fertilizer industry witnessed an improvement to 97% in 2014 from 94% in 2013, while the global industry’s operational rates remained at 80%. GCC operational rates have improved over the past years and have now reached their highest level since 2011. While fertilizer supply flourished and global production reached highest levels, the main factors impacting production in 2014 were natural gas supply shortfalls, rising uncertainties about trade measures and the massive drop in energy prices.
Fertilizer Industry Capacity Utilization Rate
99% 87%
81%
2010
94%
97%
83%
80%
80%
80%
2011
2012
2013
2014
GCC Fertilizer Industry
Source: IFA and GPCA, 2015
12
89%
Global Fertilizer Industry
GCC Fertilizer Industry Indicators 2014
9. GCC fertilizer capacity expansion
The GCC’s fertilizer production capacity is set to increase from Gcc fertilizer projects under development 40.9 million tons per annum in 2014 to 49.7 million tons by 2020, at a growth rate of 3.3% per year. The largest increase will be in the • Wa'ad Al Shamal phosphate development by Saudi production of ammonia and diammonium phosphate (DAP), both Arabian Mining Company (MA'ADEN) (Saudi Arabia) of which will see more than 2 million tons of capacity additions Ma’aden is progressing with its US$ 7.97 billion phase over the next five years. The expansion of DAP capacity will two phosphate development in Umm Wual in the north of support the region’s diversification ambitions and the utilization Saudi Arabia, which will be one of the biggest integrated of non-gas feedstock. DAP production capacity is expected to phosphate projects in the world. Wa'ad al Shamal is being reach 5.5 million tons by 2020, corresponding to a growth rate of developed to utilize mineral resources to create an upstream 8.3% per annum. and downstream phosphates cluster which will attract Saudi and international companies. We also expect urea production to expand by 1.7 million tons by 2020. • Ammonia and urea plant expansion by Gulf GCC Fertilizer Production Capacity by Product, KT Petrochemical Industries Company (GPIC) (Bahrain) Bahrain’s Gulf Petrochemicals Industry Company (GPIC) Product 2014 2020 has completed the feasibility study on its US$ 1.7bn Sitra Urea 15,196 16,960 ammonia and urea plant expansion. The project, which is Ammonia 11,692 13,816 waiting for government approval, is planned to produce Sulfur 8,001 8,020 800,000 tons per year of ammonia and 1.2 million tons per Diammonium phosphate (DAP) 3,400 5,500 year of urea. The plant is scheduled to start up in 2018. Phosphoric acid 265 1,765 • Ammonia plant by Takamul Investment Company Sulfuric acid 1,361 1,407 (Oman) NPK 440 1,150 In Oman, Takamul Investment Company and Oman Oil Co. Monocalcium and dicalcium phosphate (MCP/ 0 250 (OOC) have announced plans to build an ammonia plant in DCP) Salalah with a capacity of 1,000 metric tons per day (mtpd). Trisodium phosphate (TSP) 200 200 Given Takamul’s ambition to support the growth of a strong Purified phosphoric acid (PPA) 0 160 downstream petrochemicals industry in Oman, it is thought Urea formaldehyde 104 104 that the ammonia project is intended to catalyze investments in a chemicals cluster with wider value added. NPK water-soluble 86 86 Aqueous ammonia
65
65
Sulfur bentonite fertilizer
30
30
Sulfur coated urea (SCU)
24
24
Total
40,870
49,545
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015 13
GCC Fertilizer Industry Indicators 2014
10. Overview of global ammonia production
Asia (comprising East Asia, South Asia, GCC and other West Asia) is the largest ammonia producer in the world. As reported by the International Fertilizer Association (IFA), its production capacity reached 127.6 million tons in 2014, or 59% of the world’s total ammonia market. East Asia alone is the largest ammonia producer in the world, with production capacity exceeding 88.5 million tons in 2014. Other top ammonia producing regions are Eastern Europe and Central Asia and South Asia, which represent approximately 13% and 10% of the global ammonia market respectively. According to IFA, global ammonia capacity is projected to grow by 16% in 2015 year on year. The main additions will be in East Asia (China, Indonesia), Eastern Europe and Central Asia (Russia), North America (the United States) and Africa (Algeria, Egypt, and Nigeria). The GCC’s share in global ammonia output has increased from 3% a decade ago to 5% in 2014. Average annual growth of production capacity over the past decade was higher in the GCC than in any other region: the GCC grew by a CAGR (2004-2014) of 7.7% per annum while the global industry grew by 2.4% per annum during the same period.
14
Global Ammonia Production Capacity, KTPA Region
2004
2014
East Asia
60,957
88,485
Eastern Europe and Central Asia
23,260
27,485
South Asia
18,405
21,528
North America
20,641
17,318
Latin America
9,794
12,099
West Europe
12,648
12,064
GCC
5,592
11,692
Africa
5,000
8,785
Central Europe
8,124
7,913
West Asia (excluding GCC)
3,634
5,875
Oceania
1,170
2,230
World
169,224
215,475
Source: IFA Production and International Trade 2015
GCC Fertilizer Industry Indicators 2014
World Ammonia Production Capacity by Region, 2014 Total: 215.5 Million Tons
Other West Asia 3%
Central Europe 4% Africa 4%
Oceania 1%
GCC 5%
West Europe 5%
East Asia 41%
Latin America 6%
North America 8%
South Asia 10% Eastern Europe and Central Asia 13%
World Ammonia Production Capacity by Region CAGR (2004 - 2014), %
7.7 6.7 5.8
4.9 3.8 2.4
2.1
1.7
1.6
-0.3
-0.5
Central Europe
West Europe
-1.7 GCC
Oceania
Africa
Other West Asia
East Asia
World
Latin America
Eastern Europe and Central Asia
South Asia
North America
Source: IFA Production and International Trade, 2015
15
GCC Fertilizer Industry Indicators 2014
11. Overview of global urea production
Urea is the most widely used solid nitrogen fertilizer in the world. The agricultural sector is the main user of urea and accounts for more than 80% of total demand. World urea production capacity in 2014 was estimated at 208.3 million tons, with a growth rate of 3.2% per annum over the past decade. The GCC is among the leading producing regions and GPCA members account for 7% of total global output, increasing from 5% in 2004 with an annual growth rate of about 7% over the period. According to IFA, close to 30 new units were planned to come on stream in 2014 and 2015. Global urea capacity increased by 2% in 2014 to 208.3 million metric tons, with additions of 6% expected in 2015 to reach 221 million tons. China was expected to contribute half of the net increase in global capacity in 2014/15. The main additions to capacity outside China are accounted for by Brazil, Egypt, India, Indonesia, Saudi Arabia, the United States and Vietnam.
Global Urea Production Capacity, KTPA Region
2004
2014
East Asia
65,204
98,240
South Asia
28,306
33,185
Eastern Europe and Central Asia
12,108
16,295
GCC
7,640
15,196
North America
12,772
11,202
Africa
3,845
7,975
Latin America
6,041
7,376
West Asia (excluding GCC)
4,266
6,923
West Europe
5,252
6,670
Central Europe
6,228
4,732
Oceania
490
535
World
152 152
208 329
Source: IFA Production and International Trade 2015
16
GCC Fertilizer Industry Indicators 2014
World Urea Production Capacity by Region, 2014 Total: 208.3 Million Tons
West Asia (excl GCC) 3%
West Europe 3% Central Europe 2%
Latin America 4%
Africa 4% East Asia 47% North America 6%
GCC 7%
Eastern Europe and Central Asia 8%
South Asia 16%
7.6 World Urea Production Capacity by Region, CAGR (2004 - 2014), %
7.1 5.0 4.2
3.2
3.0
2.4
2.0
1.6
0.9
-1.3 -2.7 Africa
GCC
West Asia East (excl GCC) Asia
World
West Eastern Europe and Europe Central Asia
Latin America
South Oceania North Asia America
Central Europe
Source: IFA Production and International Trade 2015 17
GCC Fertilizer Industry Indicators 2014
12. Overview of global DAP production
Phosphorus occurs in natural geological deposits of phosphate rock, which is mined from the earth. Diammonium phosphate (DAP) is the most widely used of all phosphorus (P) fertilizers. World DAP production capacity reached 59.6 million tons in 2014, representing an average growth of 3.6% per annum over the past decade. DAP fertilizer production is highest in the East Asian region, due primarily to the fast growth of agricultural and allied sectors in China. In 2014, East Asia’s DAP producers supplied 18.2 metric tons of product to high consuming countries such as India, Sri Lanka, Vietnam and others. Due to the rising food requirements, DAP production in the East Asian region grew by 9.7% per annum between 2004 and 2014, three times the global average during the same period. GCC represented 6% of global DAP production capacity in 2014, a significantly higher proportion than several years ago. It is one of the highest producing regions after Asia, North America and Africa.
18
Global DAP Production Capacity, KTPA Region
2004
2014
East Asia
7 209
18 184
North America
16 168
13 595
South Asia
8 467
9 449
Africa
3 241
7 030
GCC
100
3 400
Eastern Europe and Central Asia
2 590
2 648
West Asia (excl. GCC)
2 206
2 000
Latin America
0
1 330
Oceania
1 022
1 174
Central Europe
754
526
West Europe
300
300
World
42 058
59 637
Source: IFA Production and International Trade 2015
World DAP Production Capacity by Region, 2014 Total: 59.4 Million Tons Central Europe 1% Oceania 2% Latin America 2%
West Europe1%
West Asia (excl GCC) 3% Eastern Europe amd Central Asia 4%
East Asia 30%
GCC 6%
Africa 12%
South Asia 16%
Source: IFA Production and International Trade 2015
North America 23%
GCC Fertilizer Industry Indicators 2014
13. Overview of global phosphate rock reserves
Saudi Arabia hosts one of the largest known but undeveloped phosphate rock deposits in the world, spread across the entire northern section of the Kingdom. It is the largest and most extensive phosphate province in the world. Saudi Arabia’s reserves are estimated at around 956 million tons of phosphate rock in a number of discrete deposits: Al Jalamid, Umm Wu’al, Al Amud, Quraymiz, Thaniyat Turayf and As Sanam, each with the potential for commercial development. Ma'aden's measured phosphate rock reserves in Saudi Arabia at 956 million tons, or 1.4% of the world’s total. Saudi Arabia was among the top 10 countries with phosphate rock reserves in 2014. Africa, East Asia and West Asia are emerging as large suppliers of phosphate rock. According to IFA, future expansions of the phosphate rock supply will mostly occur in China, Jordan and Morocco.
World Phosphate Rock Reserve Estimates in 2014 Country
Reserves (Thousand Metric Tons)
Share (%)
Morocco and Western Sahara
50,000,000
75
China
3,700,000
6
Algeria
2,200,000
3
Syria
1,800,000
3
South Africa
1,500,000
2.2
Russia
1,300,000
1.9
Jordan
1,300,000
1.9
USA
1,100,000
1.6
Australia
1,030,000
1.5
Saudi Arabia
956,000
1.4
Peru
820,000
1.2
Egypt
715,000
1.1
Others
579,000
0.9
World
67,000,000
100
Source: USGS Mineral Commodity Summary, Ma'aden, 2015
20
GCC Fertilizer Industry Indicators 2014
14. Overview of global sulfur production
Sulfur is significant to agriculture in two ways: as a plant nutrient and for the processing of phosphate rock into phosphate fertilizer. In the past 20 years sulfur has become essential for plant nutrition because it contains amino acids, proteins, fats and other compounds found in the plants. The increased use of fertilizers containing little or no sulfur resulted in a lower soil sulfur content and increasing soil sulfur deficiencies. The largest sources of elemental sulfur are petroleum refining and natural gas processing at numerous facilities around the world. Today, almost all elemental sulfur is produced as a byproduct of removing sulfur containing contaminants from natural gas and petroleum. The element's biggest commercial use (mostly after conversion into sulfuric acid) is to produce sulfate and phosphate fertilizers, because of plants’ relatively high need for these two elements. Sulfuric acid is also a primary industrial chemical outside fertilizer manufacture. As reported by USGS, global sulfur production was 72.4 million tons in 2014. Collectively, the GCC states accounted for 11% of world sulfur production, which is equivalent to about 8 million tons of sulfur.
World Sulfur Production in 2014 Country
Production (Thousand Metric Tons)
Share (%)
China
12,000
17
United States
9,770
13
Russia
7,300
10
Canada
6,000
8
Saudi Arabia
4,000
6
Germany
3,900
5
Japan
3,300
5
Kazakhstan
2,850
4
India
2,430
3
United Arab Emirates
2,000
3
Qatar
850
1
Kuwait
820
1
Other countries
17,180
24
World total
72,400
100
Source: USGS Mineral Commodity Summary, 2015
21
GCC Fertilizer Industry Indicators 2014
15. GCC fertilizer trade by country
Saudi Arabia is the largest exporter in the region and accounted for 35% of the total regional export volume. With capacity rapidly expanding in the country, Saudi's fertilizer exports have grown at a CAGR of 6.3% per annum since 2004. Qatar is the second largest fertilizer exporter in the GCC, with 8 million tons of exports. Qatar’s share in the region’s exports has increased by almost 7 percentage points since 2004 to reach 35% in 2014, equating to a growth rate of 10% per annum.
GCC Fertilizer Export by Country 30
Million Tons
The distribution of GCC fertilizer exports by country shows the dominant position of two countries: Qatar and Saudi Arabia. In 2014, the GCC region exported 22.9 million tons of fertilizer products worldwide, double its export volume in 2004. This corresponds to a compound annual growth rate of 7.5% over the past decade.
CAGR (2004-2014) 7.5% p.a.
20 1.0 15 10 5
11.1 0.7 0.8 2.1
16.3
18.8 0.2 0.9 3.3
17.0 0.8 1.0 1.9
0.8 1.0 1.8
7.5
22.9 0.8 1.2 1.5 3.2
8.0
4.7
4.1
3.9
3.6
2.6
2.2
2.6
0.6 0.9 3.0
3.1 4.4
6.2
7.0
7.3
2004
2006
2008
2010
8.1
8.2
0 Saudi Arabia
Source: UN, 2015
22
23.6
25
Qatar
UAE
Oman
2012
2014
Kuwait
Bahrain
GCC Fertilizer Industry Indicators 2014
16. GCC fertilizer trade by destination
Traditionally, Asia has been the largest export market for GCC fertilizer producers, accounting for half of the GCC exports by volume. In 2014, GCC countries exported almost 12 million tons of fertilizer products to Asia. As Asia’s demand for fertilizers increases, the region is increasing its imports. India is an important export market for the GCC’s fertilizer industry, with almost one third of its exports by volume going to India.
GCC Fertilizer Exports by Destination, 2014 = 22.9 Million Tons Europe 2% Oceania 9%
Africa 10%
Asia 53%
The Americas (North and South America) account for 26% of the GCC’s fertilizer exports by volume. While North America used to be the largest trading partner in the Americas, fertilizer exports to South America drew level with those to North America in 2014. This growth is mostly driven by Brazil, which represents almost 70% of GCC fertilizer exports to South America. Africa is becoming an increasingly important export market. In 2014, its share reached 10% or 2.2 million tons. South Africa is the largest importer of GCC fertilizers, accounting for almost half of total exports to the African continent.
Central and South America 13%
North America 13%
Source: UN, 2015
23
GCC Fertilizer Industry Indicators 2014
17. Overview of GCC fertilizer export markets
Export penetration of foreign markets has been progressive over the past decade. While a decade ago the GCC fertilizer industry exported to about 60 countries, the total is now more than 90. In 2014 alone, GCC fertilizers were imported by 78 countries, the majority of them being in Africa and Asia. An analysis of trade flows by main regions indicates that market penetration in terms of the growth of fertilizer exports to new countries has increased across all regions. Notably, GCC fertilizers go to 22 countries in Africa. The main destinations are South Africa, Madagascar and Senegal, which account for almost 75% of the total export volume to this continent. While Asia is the largest export market for the GCC fertilizer industry, market penetration has not changed a great deal over the past decade. The main destinations in Asia are India, Thailand, China, Bangladesh and Singapore. Fertilizer exports to Central and South America grew in terms of both volume and market penetration. Since 2002, GCC producers have tripled their number of markets in Central and South America to a current total of six. Brazil is the main country of destination for exports to this region and accounts for almost 70% of the volume.
North America 2 countries
Middle East 9 countries
Asia
18 countries
GCC
Central and South America
Africa
22 countries
10 countries
Oceania
2 countries
Top 10 Export Destinations for GCC Fertlizer Industry 2014 = 22.9 Million Tons
Others 16%
India 19%
Pakistan 2% Bangladesh 3% South Africa 4% USA 13% Thailand 6% Australia 7% China 13% Singapore 8% Brazil 9% Source: UN, 2015
24
Europe
15 countries
GCC Fertilizer Industry Indicators 2014
18. Employment in GCC fertilizer industry
In 2014, close to 13,000 people were employed by the GCC fertilizer industry. This figure represents direct employment by the industry – the total number of people who work in the manufacturing plants, as well as people who work outside the plant but who belong to, and are paid by, the companies, such as sales representatives, supply chain personnel, and supporting administrators. Direct employment grew by an average annual growth rate of 11% from 2010 to 2014. In 2014 alone, direct employment grew by 6% year-on-year.
CAGR (2010-2014) 11% p.a. 12.0
12.8
The value of the GCC fertilizer industry to the regional economy is much greater than its direct employment. As the industry itself has grown, it has also created jobs indirectly, for example at local and foreign contractors and suppliers which provide equipment, maintenance, food and other services. Generally, the amount of indirect employment generated by the fertilizer industry exceeds its direct employment. While the fertilizer industry’s direct employment reached 12.8 thousand people in 2014, the total employment related to the fertilizer industry (direct and indirect jobs) is estimated at around 51 thousand people.
GCC Fertilizer Industry Related Employment in 2014 (Thousands of People)
10.4 8.3
8.3
2010
2011
2012
38.3
2013
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
2015
51.0
12.8
Direct employment
Indirect employment
Total fertilizer related employment
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
25
GCC Fertilizer Industry Indicators 2014
19. Sales revenue
Like other commodity sectors, the fertilizer industry is cyclical. Over the past four years the performance of the GCC fertilizer manufacturing industry has risen by an average of 13% per annum. This been supported by considerable capacity additions in the region and improved capacity utilization rates over the same period. At the same time, global fertilizer prices saw an average 15% decline per year in the last two years following several years of stable high prices, resulting in a net price decline of 6% from 2010 to 2015.
GCC Fertlizer Industry Sales Revenue, US$ Million
CAGR (2010-2014) 13% p.a.
6,875 6,108
6,525
5,304 4,068
In 2014 itself, fertilizer sales dropped by 5% year-on-year to US$ 6.5 billion. This drop was due to sharply declining crop prices, and commercial farmers reducing their fertilizer application rates in 2014.
2010
2011
2012
2013
Source: Gulf Petrochemicals and Chemicals Association (GPCA), 2015
26
2014
20. Future outlook The industry’s growth potential is largely dependent on three factors: • As an export oriented sector, the industry’s performance will be highly subject to global demand. GCC producers are well placed to capture part of the growth potential in their traditional markets as well as the new ones in Africa, building on the strong export position in these markets that they have achieved since the 1990s and leveraging their highly developed marketing, sales and supply chain capabilities. However, global competition is becoming tougher, with several countries all over the world gaining access to low cost feedstock from alternative sources such as shale gas in the USA and new technologies such as coal to olefins in China. As a result, major current importers of GCC fertilizers, including China, are moving towards self-sufficiency in key chemicals. • The industry’s future capacity additions will be dependent on the availability and price of feedstock. • In addition, the regional fertilizer industry is entering into a new phase of growth. This is characterized by moves to diversify its portfolio by producing more “specialty grades” and phosphate fertilizers, resulting in the addition of ever increasing value to the natural resources.
The Gulf Petrochemicals and Chemicals Association (GPCA) represents the downstream hydrocarbon industry in the Arabian Gulf. Established in 2006, the association voices the common interests of more than 240 member companies from the chemical and allied industries, accounting for over 95% of chemical output in the Gulf region. The industry makes up the second largest manufacturing sector in the region, producing up to US$ 102 billion’s worth of products a year. The association supports the region’s petrochemical and chemical industry through advocacy, networking and thought leadership initiatives that help member companies to connect, to share and advance knowledge, to contribute to international dialogue, and to become prime influencers in shaping the future of the global petrochemicals industry. Committed to providing a regional platform for stakeholders from across the industry, the GPCA manages six working committees - Plastics, Supply Chain, Fertilizers, International Trade, Research and Innovation and Responsible Care - and organizes six world-class events each year. The association also publishes an annual report, regular newsletters and reports. For more information, please visit www.gpca.org.ae
Gulf Petrochemicals & Chemicals Association (GPCA) PO Box 123055 1601, 1602 Vision Tower, Business Bay Dubai, United Arab Emirates T +971 4 451 0666 F +971 4 451 0777 Email: info@gpca.org.ae