Nutrient supply - simply a question of price, short and long term. Dag Tore Mo September 18, 2015

Transcription

1 Nutrient supply - simply a question of price, short and long term Dag Tore Mo September 18, 215

2 Food prices establishing the incentives for production Index 3 FAO price index /24 1/25 1/26 1/27 1/28 1/29 1/21 1/211 1/212 1/213 1/214 1/215 Source: FAO Cereals Price Index Cereals 5 year avg. Food Price Index Food 5 year avg.

3 Current food prices do not indicate any risk of short term shortages, and still strong incentives for some Source: FAO, IGC

4 For 215/16, USDA calls for balance between production and consumption Grain consumption and production Days of consumption in stocks Million tons Days E 16F E 16F Consumption Production Source: USDA September 215

5 Grain stocks have mostly been increasing in China Million tons Grain stocks China versus the rest Days Days of consumption in stocks E 16F E 16F China Rest of world Source: USDA September 215

6 Energy and fertilizer with stronger volatility than food Index Urea 3 Oil 2 1 Food 1/24 1/25 1/26 1/27 1/28 1/29 1/21 1/211 1/212 1/213 1/214 1/215 Source: FAO, Fertilizer publications, World Bank, = 1

7 Urea driving all nitrogen pricing, including nitrates in Europe 5 CAN cif Germany (USD/mt) R² = 94% The Black Sea urea price explains 94% of the variation in the CAN price in Germany Urea fob Black Sea (USD/mt) Source: Fertilizer publications, annual average prices for

8 At historic consumption growth rates, the need for added urea production exceeds 5 million tons every year million tons urea The trend from shows a growth rate of 3.5%/year Source: IFA

9 For this period, China has covered 59% of the additional urea need, West Asia contributed 21% 9 8 Rest of world million tons urea China 2 1 West Asia Source: IFA

10 Urea export from China balancing the global market kt product Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

11 Chinese domestic urea price and export tax set the export floor price USD/mt 6 5 Urea price China (inland proxy price) Urea fob Black Sea Source: China Fertilizer Market Week, International publications

12 Projected nitrogen capacity additions outside China Year Driving regions Excluding China Algeria 23% Iran 2% Algeria 18% Saudi Arabia 16% USA 29% Algeria 14% USA 33% Nigeria 3% Nigeria 29% Russia 2% Urea capacity growth relative to nitrogen capacity Excluding China 1.1% (1.1%) 2.6% (2.6%) 3.1% (3.3%) 2.3% (2.3%) 1.6% (1.3%) Gross annual addition ~2.1% Assumed annual closures ~.5% Net annual addition ~1.6% Trend consumption growth from 22 2.% Source: CRU urea update June 215 (March 215 in brackets). Consumption data source is IFA.

13 World phosphate rock production - growth to be found in China 9 China USA Morocco Rest of world Mt rock 5 4 Source: IFA

14 Rock producers some further shifts have happened 9 Peru Egypt Tunisia Saudi Arabia Syria Mt rock 5 4 Source: IFA

15 DAP export kt product Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

16 Phosphate rock prices ( 7BPL fob Morocco ) sufficient to generate the required investments? 16 USD/ton rock

17 ..because there are no lack of reserves Source: Argus

18 But developing new rock projects implies long lead times, various types of risks, and carry high costs Source: Integer

19 19 Potash price development similar pattern as phosphates, are current prices long term sustainable? USD/ton 7 6 Fob Vancouver standard

20 No lack of exploration activity but it is costly, and with long lead times SASKATCHEWAN BHP Billiton Canadian United/Canadian Royal DSM Potash Corp. Encanto Potash Gensource Golden Fortune/Golden Union Golden Virtue Resources Karnalyte Resources North Atlantic Potash (Acron) SASKATCHEWAN Sanya Resouces Taiji Resources Vale Western Potash Yancoal Zhongchuan Mining POLAND KGHM BELARUS Slavkali OTHER PROVINCES Atlantic Potash First Lithium Resources Grizzly Discoveries Manitoba Potash Corp. Pacific Potash Corp. Red Moon Potash Softrock Minerals MOP SOP SOPM Other potash products GERMANY Source: CRU UNITED STATES American Potash Corp. EPM Mining Ventures IC Potash Mesa Exploration Michigan Potash NA Potash Developments Passport Potash Potash Minerals Potash Ridge Red Metal Sennen Potash Sirius Minerals BRAZIL AguiaResources B&A Minercao Brazil Potash Corp. Lara Exploration Pacific Potash Corp. Petrobras Vale Verde Potash K+S Potash West UNITED KINGDOM Sirius Minerals SPAIN Highfield Resources SUDAN Regency Mines/IMRAS PERU GrowMax Agri Corp SalSud BOLIVIA Comibol ARGENTINA & CHILE AllanaPotash Dajin Resources Galaxy Resources Lithium Americas Corp Marifil Mines Orocobre Potash Dragon Rodinia Lithium Vale ERITREA & ETHIOPIA AllanaPotash Beijing Sinoma Mining Circum Minerals Ethiopotash (Yara) NGEx Resources South Boulder Mines CONGO African Potash Elemental Minerals Holle Potash (AfriMines) Luyuan des Mines (CITIC) MagMinerals SOCOMIP BOTSWANA & NAMIBIA Great Quest Fertilizer Potash Dragon AUSTRALIA Agrimin Highfield Resources Kalium Lakes Minemakers Potash West Reward Minerals Rum Jungle Resources Sirius Minerals KAZAKHSTAN Kazakhstan Potash Corp. THAILAND & LAOS ASEAN Potash Mining Asia Pacific Potash Co. FYI Resources Mingda Thailand Orient Mining Sino-Agri Minerals Thai Cali Company Viet-Lao Salt & Chemicals

21 With plenty of additional capacity already committed 1 95 million tonnes KCl existing capacity Brownfield additions Greenfield additions Source: CRU