Current world fertilizer trends and outlook to 2010/11

Transcription

1 Current world fertilizer trends and outlook to 2010/11

2 Current world fertilizer trends and outlook to 2010/11 FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS Rome, 2007

3 The designations employed and the presentation of material in this information product do not imply the expression of any opinion whatsoever on the part of the Food and Agriculture Organization of the United Nations concerning the legal or development status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. All rights reserved. Reproduction and dissemination of material in this information product for educational or other non-commercial purposes are authorized without any prior written permission from the copyright holders provided the source is fully acknowledged. Reproduction of material in this information product for resale or other commercial purposes is prohibited without written permission of the copyright holders. Applications for such permission should be addressed to: Chief Electronic Publishing Policy and Support Branch Communication Division FAO, Viale delle Terme di Caracalla Rome, Italy or by to: FAO 2007

4 iii Contents The world fertilizer outlook 1 Demand 3 Nitrogen 3 Phosphate 4 Potash 5 Supply 6 Nitrogen 6 Phosphate 7 Potash 7 Supply and demand balances 8 Nitrogen 9 Phosphate 9 Potash 10 The regional fertilizer situation 11 Africa 11 America 12 North America 12 Latin America 12 Asia 13 West Asia and North East Africa 13 South Asia 13 East Asia 13 Europe 15 Central Europe 16 Western Europe 16 Eastern Europe and Central Asia 17 Oceania 17

5 iv Annexes 1. Explanatory note on supply and demand balances World and regional potential nitrogen supply and demand balances (thousand tonnes) World and regional potential phosphate supply and demand balances (thousand tonnes) World and regional potential potash supply and demand balances (thousand tonnes) Regional country classification 33

6 v List of tables 1. World Fertilizer Consumption 2006/ / World fertilizer supply and demand 2006/ / World nitrogen supply and demand balance 2006/ / World phosphate supply and demand balance 2006/ / World potash supply and demand balance 2006/ / Africa fertilizer forecast 2006/ / America fertilizer forecast 2006/ / Asia fertilizer forecast 2006/ / Europe fertilizer forecast 2006/ / Oceania fertilizer forecast 2006/ /

7 vi List of figures 1. Regional and subregional share in world total nitrogen comsuption Regional and subregional share in world total phosphate comsuption Regional and subregional share in world total potash comsuption

8 vii Current world fertilizer trends and outlook to 2010/11 This report presents world nitrogen, phosphate and potash fertilizer medium term supply and demand projections for the period 2006/ /11. The FAO/Fertilizer Organizations Working Group made the forecasts in October The balances in Annexes 2-4 present a medium-term indication for possible changes in fertilizer nutrient demand and supply by region and subregion. Changes in installed supply capacity, operating rates and demand vary annually. Annex 1 provides explanatory notes on supply and demand balances. FAO, in collaboration with experts from the Working Group dealing with fertilizer production and trade, provides five-year forecasts of world and regional fertilizer supply and demand balances. All fertilizer references are in terms of plant nutrients: nitrogen (N), phosphate (P 2 O 5 ) and potash (K 2 O). The fertilizer demand data refer to the calendar year. For countries that report their fertilizer statistics on a fertilizer year basis, data appear under the fertilizer year that begins in the same calendar year. The contributions made by the fertilizer industry associations, and their representatives are gratefully acknowledged.

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10 ix Summary This report provides an overview of the information on the world fertilizer situation in 2006/07 and a forecast up till 2010/11. At global level there is ample supply of all three major fertilizer nutrients. Africa will remain a major phosphate fertilizer exporter and increase nitrogen fertilizer exports. The North America region has decreased its nitrogen fertilizer supply capacity significantly, but will remain a primary fertilizer nutrient supplier for phosphate and potash. The Asia region may soon reach a positive balance for nitrogen; the region will continue to rely on imports for phosphate and potash. Europe remains a nitrogen and phosphate fertilizer deficit- and potash fertilizer surplus region. East Europe and Central Asia will continue to be the major nitrogen and potash exporting region in the world. In Oceania the deficits of all three nutrients are expected to persist. The review discusses the world fertilizer situation in relation to crop production. Fertilizer demand and supply and their balances are presented at global level for each of the three nutrients.

11 x Region N,P,K 2006/ / / / /11 Nutrient balance per region ( 000 tonnes) Africa N P 2 O K 2 O (472) (495) (507) (524) (541) America N P 2 O K 2 O Asia N P 2 O K 2 O Europe N P 2 O K 2 O EECA 1 N P 2 O K 2 O Oceania N P 2 O K 2 O World N P 2 O K 2 O East Europe and Central Asia

12 The world fertilizer outlook In October 2006, the FAO/Fertilizer Organizations Working Group reviewed the prospects for fertilizer demand until 2010/11 and the supply and demand balances. The underlying considerations were: The preliminary outcome of continued long-term fertilizer demand projections in relation to agricultural production perspectives. World agriculture (aggregate value of production) has been growing at rates of percent in the last four decades, with much of the growth originating in the developing countries ( percent). The high growth rates of the latter reflected, among other things, developments in some large countries foremost among them is China. Despite the drastic fall in the population growth rates, the absolute annual increments continue to be large. Seventy nine million persons are being added to world population every year beginning from the second half of 1990s and this will remain at over 50 million until the mid-2030s. Within the developing countries themselves, there will be increasing population difference. By 2050, 18 million of the 26 million added annually to the world population will come from Sub-Saharan African. Food production and fertilizer application are inextricably linked. With global population rising and many countries enjoying a longawaited economic growth, the demand for higher-quality, nutrientrich food is increasing. This long-term trend supports the continuing appetite for potash, nitrogen and phosphate to protect and restore the fertility of the world s agricultural land. FAO s forecast for world cereal production in 2006 now stands at 1.6 percent less than the 2005 output. The shortfall in production compared to the expected utilization in 2006/2007 has grown, and a larger drawdown in global cereal stocks is now forecast. World cereal utilization in 2006/2007 is likely to increase with 1.3 percent from the previous season s peak. This expansion is associated not

13 Current world fertilizer trends and outlook to 2010/11 only with a modest rise in food consumption and a strong growth in industrial use, driven mainly by higher usage of maize for producing ethanol, and a recovery in animal feed usage. The anticipated declines in wheat and coarse grains stocks are expected to occur mostly in the EU and United States as a result of the decline in their production together with strong domestic demand and exports. The maize crop is forecast to fall by (5 percent) to 268 million tonnes in the United States, as producers are expected to shift land to less input-intensive crops (such as soybeans) due to high fertilizer and fuel costs. In Argentina the planted area also decreased by 10 percent in response to low prices, higher production costs and higher export taxes, while prolonged dry weather have reduced yields. In contrast, a larger maize crop production is expected this year in Brazil, where the area planted to the main season crop increased by 11 percent in response to more attractive prices for maize compared with soybeans as well as technical need for crop rotation. Industrial use of coarse grains continued to expand rapidly in 2005/06. Apart from a strong demand for starches and sweeteners, the main driving factor has become the exponential growth in maizebased ethanol production, fuelled by rapid increases in world energy and petrol prices. Much of the impact of accelerated investments in ethanol plants across several countries around the world is yet to be felt. In the United States, the world s leading maize-based ethanol producer, the amount of maize used as the main feedstock for ethanol production is estimated to have touched a new record of over 40 million tonnes in 2005/06. The oil crops sector has been one of the most dynamic parts of world agriculture in recent decades. The projected growth in demand, and the still considerable potential for expansion of production in some of the major exporters, suggests that past trade patterns will continue for some time, that is, rapidly growing imports in most developing countries and export growth of the main exporters. Global oilseed production in 2006/07 is currently forecast to increase by less than one percent, a considerable slowdown in production growth. Soybean production is anticipated to expand by 2-3 percent, reaching a new record. In the United States, the world s main soybean producer, a

14 The world fertilizer outlook record soybean crop has been harvested, thanks to a rise in both area and yield. Demand Annexes 2, 3 and 4 present forecasts on regional and global fertilizer demand for the three major plant nutrients until 2010/11. World fertilizer consumption is to increase at a growth annual rate of about 2 percent from 2006/2007 to 2010/2011, equivalent to an increment of thousand tonnes. About 58 percent of this growth will take place in Asia and 24 percent in America. Nitrogen The forecast is for world nitrogen fertilizer demand to increase at an annual rate of about 1 percent until 2010/2011, which is an overall increase of 6.1 million tonnes. The United States is the world s largest nitrogen importer and purchased 8 million of ammonia from other countries in 2005, 12 percent increase over the previous year. More than half of that came from Trinidad, where gas costs are lower and producers have easy access to the US Gulf. TABLE 1 World Fertilizer Consumption, 2006/ /2011 Growth annual rate N P K World 1% 2% 2% Africa 3% 4% 3% America 1% 1% 2% North America 1% 1% 1% Latin America 2% 2% 4% Asia 1% 2% 3% West Asia 1% 1% 1% South Asia 2% 3% 3% East Asia 1% 2% 3% Europe 1% 1% 0% Central Europe 2% 1% 1% West Europe 0% -1% 0% East Europe & Central Asia 4% 6% 2% Oceania 1% 1% 1%

15 Current world fertilizer trends and outlook to 2010/11 Figure 1 Regional and subregional share in world total nitrogen comsuption West Europe 10% East Europe and Central Asia 3% Oceania 2% Africa 4% North America 16% Central Europe 2% Latin America 6% West Asia 4% East Asia 36% South Asia 21% High natural gas prices in the US have resulted in North American producers curtailing production. Latin American producers have filled a significant portion of the demand growth, as rising transportation costs and internal demand slowed exports from the former Soviet Union and Middle East countries. Phosphate The expected annual growth rate in world demand for phosphate fertilizers is about 3 percent until 2010/2011 with an increment of 3.6 million tonnes, compared to the demand in 2006/2007. About 62 percent of this growth will take place in Asia and 24 percent in America. The United States remains the world s leading consumer, producer and supplier of phosphate fertilizer; however, its share of the world market has been shrinking. Consumption is expected to remain above 4 million tones per year. Since 2000, increased exports of MAP, primarily to South America, compensated for lower DAP exports to Asian markets in Asia. Phosphate

16 The world fertilizer outlook Figure 2 Regional and subregional share in world total phosphate comsuption East Europe and Central Asia 2% West Europe 7% Central Europe 2% Oceania 4% Africa 3% North America 13% Latin America 12% West Asia 4% East Asia 39% South Asia 19% fertilizer production increasingly is being located in the large consuming regions of Asia and South America, reducing the need for imported fertilizers to these regions. U.S. exports of phosphate fertilizer to China and India, the two largest consumers of phosphate fertilizers, have dropped significantly. Potash World demand forecast for potash fertilizers is to increase at an annual average rate of about 2 percent, equivalent to an increment of 2.6 million tonnes. Growth in China s potash fertilizer consumption has risen alongside the increase in its per capita GDP. Both trends are expected to continue. Industry experts suggest China s potash consumption will have a compound annual growth rate of 7 percent in the years ahead. India continued a strong pattern of economic growth and increased potash imports in response to increase demand. Sugar cane production in Brazil has also witnessed fast growth, driven by the use of sugar in ethanol production.

17 6 Current world fertilizer trends and outlook to 2010/11 Figure 3 Regional and subregional share in world total potash comsuption Central Europe 3% East Europe and Central Asia 3% West Europe 11% Oceania 2% Africa 3% North America 20% Latin America 16% East Asia 37% South Asia 3% West Asia 2% Supply Nitrogen World nitrogen supply capacity is forecast to rise by 27.3 million tonnes by 2010/2011 compared to 2006/2007. According to IFA s global annual survey conducted in late 2006, world ammonia production in 2006 was estimated at Mt, representing an increase of 3 percent over Major increases in ammonia production occurred in m ost regions, with the exception of West Europe and North America. The most significant increases occurred in China, West Asia and Oceania. North America registered a significant 6 percent decline, with most of the reduction occurring in the United States, notably during the first quarter of Production in West Asia rose by 10 percent as a result of increasing output in Oman and Saudi Arabia. Natural gas prices have a significant impact on ammonia production. When North American gas prices go up, producers are forced to examine their production decisions. Access to low-cost gas and a modern plant that

18 The world fertilizer outlook 7 can convert gas efficiently are key factors in determining competitiveness. When North American gas prices are high and US production is curtailed, ammonia prices rise. That has recently created an environment of higher ammonia prices, which benefits producers with lower-cost gas and easy shipping to the US. Regions with low-cost natural gas are expected to produce more nitrogen products in the years ahead, while areas facing higher gas pricesincluding North America and Europe are likely to further curtail ammonia production. Phosphate World phosphate fertilizer supply capacity is expected to increase by 5.3 million tonnes by 2010/2011. Phosphoric acid production in United States increased slightly. World phosphate rock production decreased by 2 percent to Mt in While phosphate is produced in more than 40 countries, 15 nations supplied 98 percent of the world s phosphate in Phosphate rock production rose 1.5 percent to 168 million tonnes in The largest producer was China, followed by the US, Morocco and Former Soviet Union countries. The lack of growth in the world phosphate production in 2006 came from a steep reduction in the production of phosphate rock in the United States and in most of the exporting countries. Production in EECA and Europe decreased by more than 1 million Mt, or 8 percent over Production in North Africa and West Asia decreased also by 1 Mt. Higher production was reported in Algeria and Togo in response to export demand. In major consuming countries, the production of phosphate rock improved in both Brazil and India, while declining in Australia, due to a severe reduction of fertilizer application during Potash The supply capacity forecast of potash is to increase by 5.2 million tonnes K 2 O during the period 2006/2007 to 2010/2011; this amounts to an annual growth rate of 3 percent per annum. Global potash production is estimated at the equivalent of 49.6 Mt, representing a decrease of 9 percent over the The world s average operating rate in 2006 declined to 76 percent, compared with 85 percent

19 Current world fertilizer trends and outlook to 2010/11 TABLE 2 World fertilizer supply and demand, 2006/ / / / / / /2011 (thousand tonnes)¹ Total supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation. in The world s major potash producers are Canada, Russia, Belarus, and Germany, which accounted for about 75 percent of world production. World production of potash dropped 16 percent in the in the first half of 2006, but recovered during the second the second half of Supply and demand balances Tables 3, 4, and 5 show the fertilizer supply and demand balances expressed in thousand tonnes fertilizer nutrient. The forecast for total world fertilizer supply is to increase by 4 percent between 2006/2007 and 2010/2011. The expectation for world fertilizer demand is to increase by 1 percent during the same period. TABLE 3 World nitrogen supply and demand balance, 2006/ / / / / / /2011 ( N thousand tonnes)¹ Total supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation. TABLE 4 World phosphate supply and demand balance, 2006/ / / / / / /2011 P205 (thousand tonnes)¹ Total supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation.

20 The world fertilizer outlook 9 TABLE 5 World potash supply and demand balance, 2006/ / / / / / /2011 K (thousand tonnes)¹ Total supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation. Nitrogen The Nitrogen supply/demand conditions in 2006 were tighter than expected, driven by sustained nitrogen fertilizer consumption in Asia and a recovery of demand in Brazil. Nitrogen fertilizer application slowed down in North America, Western Europe and Oceania. Urea took a larger share of fertilizer usage in 2006, as a result of additional capacity and competitive prices. In 2006, world ammonia capacity was estimated at Mt NH3, expanding by 3.8 Mt over The main addition to capacity occurred in China, West Asia and Oceania. Phosphate The global supply of phosphoric acid is estimated at 35.4 Mt in 2006 and 36.5 Mt in 2007, assuming a maximal production operating rate of 83 percent; this represents a growth of 1.4 percent. The global P 2 O 5 fertilizer demand is estimated at 37.8 Mt in 2006, a recovery of 3.3 percent over The global fertilizer demand in 2007 is forecast at 39.4 Mt, equivalent to a 4.2 percent growth over This increase is almost entirely based on phosphoric acid-based products, including NPKs. The global demand of phosphoric acid is estimated at 29.4 Mt in 2006 and 30.0 Mt in 2007, or a 4.7 percent increase over The global supply/demand balance of phosphoric acid shows a marginal deficit of 1.6 Mt in 2007, compared with 1.8 Mt in However, over the past two years, the world operating rate averaged 77 percent of capacity; thus, the supply/ demand situation will remain fairly balanced.

21 10 Current world fertilizer trends and outlook to 2010/11 Potash The potash global capacity will grow by 3 percent, while the demand is forecast to grow at 2 percent. Global potash capacity rose by 1.4 percent, from 35.7 Mt in 2005 to 37.2 Mt in Most of this increase occurred in Canada and China. In 2007, global capacity will continue to grow by another 0.7 Mt to 38.0 Mt; new capacity is expected in Canada and China. Between 2005 and 2007, new capacity developments will add a net 2.0 Mt MOP of capacity. World potash supply will reach 38.0 Mt in 2007, compared with 37.2 Mt in Global consumption of potassium fertilizers was 26.2 Mt in 2006, a growth of 3.4 percent over Fertilizer potash demand in 2007 is estimated at 22.6 Mt, a 0.6 percent increase over 2006.

22 The world fertilizer outlook 11 The regional fertilizer situation Africa Africa accounts for only 3 percent of world fertilizer consumption in 2006/2007. Nitrogen consumption is forecast to grow at 3 percent and phosphate and potash will grow by 4 percent and 3 percent respectively. Although Africa comprises 58 countries, fertilizer consumption continues to be mainly restricted to 10 countries and nitrogen and phosphate fertilizer production capacity exists in only 11 and 6 countries respectively. The main consumers in the region are Egypt, South Africa and Morocco. The fertilizer nutrient supply demand balance to 2010/2011 ( Table 6 )indicates that the region will remain a major exporter of phosphate fertilizer, while it will continue to import potash. Although Nigeria has large oil and gas reserves and Africa is home to the largest phosphate rock reserves in the world, SSA imports over 90 percent of the fertilizer it uses. Africa is completely reliant on imports for potash fertilizer, and the continent s nutrient production is largely dominated by nitrogen fertilizer ( 4 percent of the world supply). TABLE 6 Africa fertilizer forecast 2006/ / / / / / /2011 (thousand tonnes)¹ N supply Total demand Surplus (deficit) P supply Total demand Surplus (deficit) K supply Total demand Surplus (deficit) (472) (495) (507) (524) (541) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation.

23 12 Current world fertilizer trends and outlook to 2010/11 America North America Fertilizer consumption in North America is forecast to grow by 1 percent between 2006/2007 and 2010/2011, and represents 15 percent of global fertilizer nutrient consumption. Nitrogen, phosphate and potash consumption levels are to increase by 1 percent respectively. Latin America Total fertilizer consumption in Latin America is forecast to increase with 3 percent/year from 2006/2007 to 2010/2011, approximately 1.8 million tonnes. Brazil is one of the fastest growing fertilizer markets in the world with growth of approximately 6 percent p.a. In Brazil, fertilizer consumption and grain production have increased by almost 60 percent over the past decade, while crop acreage has increased by only 25 percent. Upward pressure on wheat, corn and soybean prices improves fertilizer demand prospects for Fertilizer consumption is forecast to reach 30 million tonnes by 2014 from approximately 20 million tones today. Brazil is set to increase its nitrogen fertilizer consumption in the coming years as the country prepares to reduce its dependency on soybeans and expand production of corn, sugarcane and citrus to keep pace with the shift in global demand. TABLE 7 America fertilizer forecast 2006/ / / / / / /2011 (thousand tonnes)¹ N supply N demand Surplus (deficit) P supply P demand Surplus (deficit) K supply K demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation.

24 The world fertilizer outlook 13 Asia West Asia and North East Africa Total fertilizer consumption is forecast to increase with 1 percent/year from 2006/2007 to 2010/2011. The expected annual average increases in fertilizer consumption in the subregion in the next five years are: 4 percent for nitrogen, 4 percent for phosphate and 2 percent for potash. Table 8 shows the supply and demand balances for the subregion indicating the subregion s medium-term export potential for nitrogen and potash. The subregion is self-sufficient in phosphate. South Asia India, Pakistan and Bangladesh remain the main fertilizer consuming countries in South Asia. The subregion is facing considerable population growth and limited reserves of good agricultural land. The forecast shows an average annual growth of 3 percent. The overall consumption of fertilizer nutrients displayed a robust growth of 12.4 percent during over The all India consumption of total nutrients reached an all time high of million tonnes in The consumption of N at million tonnes, P 2 O 5 at 5.26 million tonnes and K 2 O at 2.50 million tonnes in recorded a growth of 10.3 percent, 13.7 percent and 21.3 percent, respectively, over There was heavy import of Urea, DAP and MOP due to surge in demand and inadequate domestic production. Total import of Urea was 2.06 million tonnes, while 2.44 million tonnes of DAP and 4.58 million tonnes of MOP. Phosphate fertilizer consumption in Pakistan is expected to significantly increase during Government decided to allocate earlier envisaged subsidies for N-fertilizer imports for P fertilizer on the premise that increased domestic N-fertilizer production would meet increment demand rather than increased N-fertilizer imports. East Asia Fertilizer consumption in the subregion is to increase with 1 percent from 2006/2007 to 2010/2011. China is the largest fertilizer consuming country

25 14 Current world fertilizer trends and outlook to 2010/11 in the subregion. Its rapid economic growth and gradual transition towards a market economy have brought significant changes in production and consumption patterns and in agricultural trade. Beside the traditional number one USA, in less than 2 decades China emerged as a major player in the world Phosphate Industry. The actual consumption of nitrogenous fertilizer will be basically equal to reasonable consumption, and the supply of phosphate fertilizer and potash fertilizer will be short. The supply of nitrogenous fertilizer in North China, East China and Central China has exceeded demand, and that in other areas is short, especially Northwest China, while that in Southwest China is not so short; the supply of phosphate fertilizer in Central China exceeded demand slightly, and that in North China, Northwest China and Northeast China is in serious shortage; there is a shortage in the supply of potash fertilizer all over the country, especially North China, followed by Central China, East China, South China, Southwest China, Northwest China and Northeast China. Fertilizer consumption reached 4.85 billion tonnes in 2004, an increase of 9.94 percent year-on-year. The preferential policies on agriculture will continue to promote farmers enthusiasm for planting, and improve farmers capacity for dealing with price increases of fertilizer. It was predicted that in 2005 and 2006, the fertilizer consumption respectively would reached 5.15 billion tonnes and 5.6 billion tonnes, an increase of 6.19 percent and 8.74 percent. In 2006 the production and sales rate of fertilizer declined compared with The production and sales rate of fertilizer reached about 98 percent in Fertilizer manufacturers focused on expanding their production capacity in 2006, but after the production and sales rate declined in 2005, the production capacity of these enterprises were excessive, and the utilization rate of production capacity decreased significantly. Therefore, the production and sales rate of the fertilizer industry is expected to increase in 2006, reaching about 98.5 percent. Although China is a major fertilizer producer, it is still the largest fertilizer consumer in the world. In addition, because the structure of fertilizer production is unreasonable, with excessive output of nitrogenous fertilizer and a shortage of phosphate fertilizer and potash fertilizer, the

26 The world fertilizer outlook 15 TABLE 8 Asia fertilizer forecast 2006/ / / / / / /2011 (thousand tonnes)¹ N supply Total demand Surplus (deficit) P supply Total demand Surplus (deficit) K supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation. supply gap should depend on imports. Imported fertilizer is mainly phosphate fertilizer and potash fertilizer. The production capacity of phosphate fertilizer and nitrogenous fertilizer increased significantly in 2006, and in terms of the potash fertilizer, the growth rate of the production capacity is far lower than that of demand, and it is predicted that after 2006, imported fertilizer will take potash fertilizer as the core. The amount of imported fertilizer is expected to reach billion tonnes and 1.45 billion tonnes in 2005 and 2006, an increase of percent and 2.54 percent respectively. Europe Difficult market conditions as well as high energy costs, which consequently also led to higher fertilizer costs, led to a significant drop in fertilizer consumption. In the Eu-15, fertilizer consumption has dropped dramatically ( -7.2 percent on average). In the new Member States, consumption is stable, but does not compensate the decrease in the EU-15. In the EU-25 during the season, nitrogen consumption decreased by 3.3 percent (to million tonnes N). Phosphate decreased by -8.3 percent ( to 3.01 million tonnes P 2 O 5 ), all compared to 2004/2005. Consumption of the three major nutrients, nitrogen, phosphorus and potassium, is envisaged to decline by -3.5 percent, -12 percent and

27 16 Current world fertilizer trends and outlook to 2010/ percent respectively over the next ten years. For the new Members States, a significant increase in consumption is foreseen: +32 percent for nitrogen, +17 percent for phosphorus and + 18 percent for potassium, and is linked to an expected +19 percent increase in cereal production. At EU-25 level the consumption of nitrogen may increase moderately by 0.28 million tonnes (+2.5 percent), while the next ten years will see phosphorus and potassium both continuing to decline by 0.23 and million tonnes respectively. Central Europe Poland is the main fertilizer consumer in the subregion, since this country accounts for 55 percent the total nutrients consumption of the EU-10. The overall increase in the EU-10 countries, in absolute figures (0.8 million tonnes for N+P+K), is still slightly smaller than the decrease in the EU-15 countries. Western Europe Nitrogen and Phosphate consumption fall in Western Europe ( -5.7 and 4.6 percent respectively) over the period 2004/ /2006. Eastern Europe and Central Asia Russia s fertilizer industry accounts for almost 60 percent of total regional fertilizer production. It is number 4 in global production of nitrogen after TABLE 9 Europe fertilizer forecast 2006/ / / / / / /2011 (thousand tonnes)¹ N supply Total demand Surplus (deficit) P supply Total demand Surplus (deficit) K supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation.

28 The world fertilizer outlook 17 TABLE 10 Oceania fertilizer forecast 2006/ / / / / / /2011 (K thousand tonnes)¹ N supply capability Total demand Surplus (deficit) P supply Total demand Surplus (deficit) K supply Total demand Surplus (deficit) ¹ Difference between supply potential and consumption; negative signs denotes deficit situation. China, India and USA/ It also number 4 in global phosphate production after China, USA and India. It ranks second in world potash output after Canada. In 2005 fertilizer output in Russia reached around 16 million tonnes nutrient. That was almost 6 percent up on The production is by far higher than consumption which in 2005 totaled about 3 million tonnes. The surplus, which is mainly seen in output of nitrogen and potash fertilizers, is exported. The overall fertilizer consumption is expected to increase by 4 percent from 2006/2007 to 2010/2011. Oceania Fertilizer consumption in Oceania is expected to grow by 1 percent per year, till 2010/2011.Nitrogen, Phosphate and Potash consumption will grow by 1 percent respectively. Oceania depends on imports to meet the balance of its nitrogen and phosphate and all of its potash requirements. Table 10 shows that the deficits for all three nutrients are foreseen to remain stable.

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30 19 Annex 1 Explanatory note on supply and demand balances New Protocol In October 2006, the FAO/Industry Working Group adopted a new protocol for the preparation of its fertilizer nutrient supply/ demand balances. The work was developed by the IFA Production and International Trade Committee in 2005/06. The main objective of this revision was to take into account the resilient surplus between production and consumption and update the parameters used in the computation of supply and losses. The new definitions and their criteria are defined as follows: Supply : - Total supply is defined as the maximum production achievable and is computed from the capacity, multiplied by the highest operating rate achieved over the previous five years. For new plants, a rampup of the operating rates was defined for the first three years of operation, using the following levels: 85 percent, 90 percent and 100 percent. Demand : - Fertilizer demand is provided on a calendar year basis. - Net non-fertilizer demand excludes the use of products which are recovered as by-products from industrial processes and then used as fertilizers. - Losses occur at both the production and consumption points; their magnitudes have been estimated at between 2.5 percent (nitrogen and phosphate) and 5 percent (potash) of total fertilizer and nonfertilizer demand.

31 20 Current world fertilizer trends and outlook to 2010/11 - Unspecified usages account for the historical residual tonnage from the production/consumption balances. This tonnage could be used either in fertilizers or in non-fertilizer products and would equate to about 4 percent of the other uses (nitrogen).

32 21 Annex 2 World and regional potential nitrogen supply and demand balances (thousand tonnes) WORLD 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others Surplus (-Deficit) AFRICA 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others AMERICA 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others North America 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others

33 22 Current world fertilizer trends and outlook to 2010/11 Latin America 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others ASIA 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others West Asia 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others South Asia 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others East Asia 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others EUROPE 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others

34 Annex 2 World and regional potential nitrogen supply and demand balances 23 Central Europe 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others West Europe 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others East Europe and Central Asia 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others OCEANIA 2006/ / / / /11 NH 3 Capacity (as N) NH 3 Supply N Fert. Consumption Non Fertilizer Demand & Others

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36 25 Annex 3 World and regional potential phosphate supply and demand balances (thousand tonnes) WORLD 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand Surplus (-Deficit) AFRICA 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand AMERICA 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand

37 26 Current world fertilizer trends and outlook to North America 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand Latin America 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand ASIA 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand West Asia 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand South Asia 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand

38 Annex 3 - World and regional potential phosphate supply and demand balances 27 East Asia 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand EUROPE 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand Central Europe 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand West Europe 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand East Europe and Central Asia 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand

39 28 Current world fertilizer trends and outlook to OCEANIA 2006/ / / / /11 Capacity Supply P 2 O 5 Fertilizer Consumption H 3 Fert. Demand Non-Fertilizer H 3 demand

40 29 Annex 4 World and regional potential potash supply and demand balances (thousand tonnes) WORLD TOTAL 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other Surplus (-Deficit) AFRICA 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other AMERICA 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other North America 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other

41 30 Current world fertilizer trends and outlook to Latin America 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other ASIA 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other West Asia 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other South Asia 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other East Asia 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other EUROPE 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other

42 Annex 4 - World and regional potential potash supply and demand balances 31 Central Europe 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other West Europe 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other East Europe and Central Asia 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other OCEANIA 2006/ / / / /11 Potash Capacity Potash Supply Potash Fertilizer Consumption Non Fertilizer Demand & other

43

44 33 Annex 5 Regional country classification 1 AFRICA Liberia AFRICA Portugal (developing countries) Libya (developed.countries) Spain Algeria Madagascar South Africa Sweden Angola Malawi Switzerland Benin Mali EUROPE United Kingdom Botswana Mauritania Central Europe Burkina Faso Mauritius Albania AMERICA Burundi Morocco Bulgaria Cameroon Mozambique Czech Republic Canada Cape Verde Namibia Former Yugoslavia 2 United States Central African Rep. Niger Hungary Chad Nigeria Poland Latin America Comoros Reunion Romania Argentina Congo, Dem. R Rwanda Slovak Republic Bahamas Congo Rep St Helena Barbados Côte d Ivoire Sao Tome & Principe Western Europe Belize Djibouti Senegal Austria Bermuda Egypt Seychelles Belgium-Luxembourg Bolivia Eq. Guinea Sierra Leone Denmark Brazil Eritrea Somalia Finland Chile Ethiopia Sudan France Colombia Ethiopia PDR Swaziland Germany Costa Rica Gabon Tanzania Greece Cuba Gambia Togo Iceland Dominica Ghana Tunisia Ireland Dominican Rep. Guinea Uganda Italy Ecuador Guinea-Bissau Western Sahara Malta El Salvador Kenya Zambia Netherlands French Guyana Lesotho Zimbabwe Norway 1 The classification attempts a purely geographical approach to facilitate easier comparison of historical data. 2 Bosnia-Herzegovina, Croatia, Macedonia, Slovenia, Yugoslavia (Serbia and Montenegro).