Market Outlook & IFA2030. Charlotte Hebebrand, IFA

Transcription

1 Market Outlook & IFA2030 Charlotte Hebebrand, IFA

2 Agenda IFA Medium Term Outlook Demand & Supply Highlights IFA2030 Key Insights

3 FERTILIZER DEMAND

4 USD per barrel Global economic growth has recovered Until the next turbulence % China 16 Advanced economies 14 Emerging market and developing economies 12 World GDP Growth Crude oil, Brent Spot Price Apr-13 Apr-14 Apr-15 Apr-16 Apr-17 Apr-18 Source: IMF (June 2018) Source: U.S Energy Information Administration (June 2018)

5 USD/Metric ton Medium-term outlook: agricultural prices seen subdued Medium-term commodity price forecasts remain conservative OECD nominal price forecast Soybeans: +2.0% / year Rice: +0.4% / year Wheat: +1.6% / year Maize: +2.4% / year % 5 OECD average annual growth rates Slower growth in food demand, driven mainly by population expansion Due to populationgrowth Due to per capita demand growth (food & other uses) Cereals Meat Fish Fresh dairy Roots and tubers Source: OECD-FAO, Sugar Vegetable oil

6 Medium-term: global demand seen close to 200 Mt by 2022/23 Mt nutrients Evolution of global fertilizer demand Base year 185 K20 P205 N World Demand (incl China) 199 CAGR (base year 2022/23) N +1.0% P 2 O % K 2 O +1.8% Total +1.3% World Demand (excl China) CAGR (base year 2022/23) N 1.6% P 2 O 5 2.1% K 2 O 2.2% Total 1.8% Source: IFA Agriculture, June 2018

7 Firm demand expansion in Brazil, India and ROW Total fertilizer demand outlook in the top-5 fertilizer markets Mt nutrients Base year ROW +16% CHINA 3% INDIA +11% USA +2% EU +1% BRAZIL +19% Anticipated increase in demand by 2022/23 Mt nutrients 10 India 8 Brazil USA 6 EU 4 China ROW Source: IFA Agriculture, June Source: IFA Agriculture, June 2018 The top-5 fertilizer markets account for 2/3 of current demand but 1/3 only of anticipated future growth

8 Africa + EECA = ¼ of anticipated global growth East Asia 8% South Asia North America Lat. Am. & Carib. W. & C. Europe 28% 27% Top-2 = 55% Latin America > North America by the end of the outlook period E. Eur. & C. Asia 11% Africa West Asia 14% Next 2 = 25% Av. 2015/16 to 2017/18 Variation in 2022/23 Oceania Source: IFA Agriculture, June Mt nutrients

9 Lat Am, Africa and EECA increasinglyinfluential Anticipated Regional Volume Expansion by 2022/23 Anticipated Relative Regional Growth by 2022/23 Lat. Am. & Carib. South Asia Africa E. Eur. & C. Asia East Asia North America West Asia Oceania W. & C. Europe N P2O5 K2O Source: IFA Agriculture, June Leading regions N: Lat Am, S Asia, Africa, EECA P: Lat Am, S Asia K: E Asia, Lat Am, SAsia Mt nutrients Africa E. Eur. & C. Asia Lat. Am. & Carib. South Asia West Asia Oceania North America East Asia W. & C. Europe -5% 5% Source: IFA Agriculture, June % 25% 35%

10 FERTILIZER SUPPLY

11 Global capacity evolution: 2017 to Ammonia P acid Potash 2017= Source: IFA Production & International Trade, June to 2022 Total CAPEX in new projects will reach US$98B constructing 60 new production units adding 78 Mt products of capacity POTASH +8%, large expansions in EECA, NA P ACID, PP +6%, capacity increasing in Morocco NITROGEN, UREA +3%, capacity increasing in EECA, SA, AF but decreasing in China West Asia: some increase in P capacity, marginal on N&K

12 Nitrogen (Ammonia) capacity: 2017 to 2022 Mt N China RoW Global nitrogen capacity +3% (+5 Mt N), reaching 190 Mt N (or 232 Mt NH 3 ) Clear differentiated trends: China: -6% (-4 Mt N), reaching 55 Mt N : 31% of global capacity; 2022: 28% Rest of World +7% (+9 Mt N) reaching 135 Mt Large increases in SA, AF, EECA Source: IFA Production & International Trade, June 2018

13 Urea capacity expansions: 2017 to 2022 Azerbaijan Turkmenistan Russia Bolivia Mexico USA EXPANSIONS Brazil Kuwait WCE REDUCTIONS Nigeria Egypt Indonesia Iran India China Mt urea Global urea capacity + 5% (+10 Mt), reaching 226 Mt in % in ; 50%, ; but -3 Mt in new units, of which 10 in China China: -6%, reaching 68 Mt urea in 2022 Source: IFA Production & International Trade, June 2018

14 P Acid & PP capacity developments: 2017 to 2022 Mt P 2 O Mt 3.8 Mt Morocco Saudi Arabia Egypt 72% share of PP capacity expansions India Kazakhstan China Turkey Russia Brazil Mt P 2 O 5 P Acid capacity +6%, reaching 64.3 Mt P 2 O 5 10 new PA units, no new MGA unit PP capacity +3% (+6 Mt), reaching 53 Mt P 2 O 5 90% dedicated to DAP plus flexibility Source: IFA Production & International Trade, June 2018

15 Potash capacity developments: 2017 to 2022 Mt MOP eq World Global potassium capacity +10%, reaching 64.6 Mt K 2 O (110 Mt MOP equivalent) in 2022 Main increases: Russia: +6.2 Mt, to 19.5 Mt MOP Belarus: +1.9 Mt, to 14.5 Mt Canada: +1.1 Mt, to 38.8 Mt China on MOP: +0.6 Mt, to 9.3 Mt China on SOP: +0.8 Mt SOP Source: IFA Production & International Trade, June 2018

16 Supply / Demand outlook: 2017 to 2022 NITROGEN Mt N SUPPLY DEMAND +1.0% pa (5% to 2022) +1.2% pa (7% to 2022) Potential surplus declining to 11 Mt N (from 14Mt N) PHOSPHORIC ACID Mt P O SUPPLY DEMAND +1.8% pa (10% to 2022) +1.7% pa (9%) 40 Potential surplus nearly static at 2 Mt P 2 O 5 POTASSIUM Mt K O SUPPLY DEMAND +3.2% pa (17% to 2022) +1.9% pa (9.5%) Potential surplus nearly doubling to 8 Mt K 2 O (from 4 Mt K 2 O) Sources: IFA Agriculture and IFA Production & International Trade, June 2018

17 Government policies increasingly affect fertilizer demand & supply around the World CANADA: Federal government imposing carbon pricing systems USA: State level environmental regulations and litigation TRADE: Rise in anti-dumping, import tariffs, non tariff barriers; US-China; NAFTA; US-EU; Ukraine-Russia NIGERIA s Presidential Fertilizer Initiative EU New Fertilizer Regulation, still in discussion TANZANIA s Bulk Procurement System CHINA: environmental policies impacting use and production; E-10 INDIA: adjustment of fertilizer subsidies; uncertainty regarding impact of neem coated urea, new policy on 45 kg urea bags; uncertainty regarding DBT s impact when combined to Soil Health Card GLOBAL LEVEL: increasing calls to improve fertilizer use efficiency and nutrient recycling, and mitigate the impact of N and P losses to the environment (UN Environment, FAO, OECD)

18 Key takeaways from this market outlook DEMAND Slower growth in food demand Agricultural production will grow more slowly, driven by yields Subdued agricultural prices Chinese demand at tipping point Significant growth elsewhere! Policies and regulations major demand factor Increasing focus on NUE Fertilizer use (76% of total sales) and industrial uses, both offering very modest growth prospects Upside developments always possible but likely slow down of global fertilizer demand growth SUPPLY Capacity increases+lagging demand = surpluses in all segments declining N surplus: impacted by capacity reduction in China driven by environmental policies Status quo P surplus: Morocco dominating supply growth Massive K surplus expansion (Russia, Belarus, and Canada) Trade expected to expand Urea, +7% over 2017, to Mt in 2022 PP, +15% over 2017, to 38 Mt in 2022 MOP, +12% over 2017, to 60 Mt in 2022 Other mitigating developments always possible but likely continuation of sizeable surpluses

19 IFA 2030 KEY INSIGHTS

20 Scenarios in brief COMMODITY CLASSIC NEW HORIZONS REDUCED DYNAMISM READY, SET, GO

21 Scenarios in brief READY, SET, GO IN BRIEF o Sluggish agricultural production growth & strong innovation drivers o Lower agricultural growth driven by greater resource efficiency, reduced food waste, and breakthrough technologies leading to radical changes in the way food is produced and consumed. OPERATING CONTEXT Food security can be achieved without significantly higher agricultural production. Society rejects unsustainable production processes and consumption patterns as pressure mounts around natural resource stress. High expectations, requirements for cyclical economy, efficient production processes and greatly enhanced nutrient use efficiency.

22 Scenarios in brief NEW HORIZONS IN BRIEF o Vigorous agricultural production growth & strong innovation drivers o Agricultural production growth driven by innovations enabling new types of farming and greater integration of smallholders into markets. OPERATING CONTEXT Growth fueled by innovations that expand agriculture into unfavorable climates and onto marginal and formerly degraded lands. The importance of soil carbon sequestration increasingly recognized. High expectations, requirements for efficient production processes and greatly enhanced nutrient use efficiency.

23 OPERATING CONTEXT Scenarios in brief COMMODITY CLASSIC IN BRIEF o Vigorous agricultural production growth & weak innovation drivers o Higher agricultural production growth driven by population growth and rising incomes. Infrequent extreme weather events with limited and localized impact. Consumers largely unimpressed by food fads and news headlines; regulators and NGOs focused elsewhere. Relatively little pressure to improve environmental performance, but environmental impacts linked to ongoing inefficiencies will be compounded. No significant increase in nutrient recycling and limited improvements in nutrient use efficiency.

24 Scenarios in brief REDUCED DYNAMISM IN BRIEF o Sluggish agricultural growth & weak innovation drivers o Lower agricultural growth driven by lower than expected population growth, and/or decline in living standards due to financial crises, global or regional geopolitical crisis and trade wars, diminishing farming profitability, resource constraints, more extreme weather events. OPERATING CONTEXT Lack of innovative solutions to address resource constraints and improve farmer profitability. Policymakers focus on conflicts and financial crisis rather than agricultural development or resource efficiency. No excitement about circular economies.

25 Insights & implications 1. Innovation & disruption 2. Farmers & partners o Fast emerging technologies, business models, processes & logistics across the agri-food value chain. o Wide array of technology enhanced plant nutrition solutions and services offered by diverse players. o Need to meet farmers specific plant nutrition requirements. o The industry needs to clearly position itself given the numerous sources of knowledge and inputs competing for farmers attention. o Disruptive technologies create risks and opportunities.

26 Insights & implications 3. Fertilizer demand shifts 4. Regulations & pressures o Greater emphasis on improved nutrient use efficiency and circular economy. o Underserved markets are fertilizer demand drivers both in terms of nutrient tons, but also in terms of more customized fertilizer products and application solutions. o Regulatory landscape will expand. o Greater focus on environmental stewardship, resource competition and protection, SHE & security will impact fertilizer production, distribution and application.

27 Insights & implications 5. Transparency & accountability 6. License to operation & reputation o o o Industry will face requirements for more transparency around environment and health impacts. Demands for measurable indicators and traceability, enabled by technology. Pursuit of sustainability as important as market share and shareholder value. o o Despite the critical role fertilizers play in feeding the world and contributing to improving people s lives, fertilizers are not well-understood. In order to maintain its license to operate, the industry needs to be seen as an integral part of the agriculture value chain. o Need for much wider engagement with partners and external stakeholders

28 Next steps Options NOVEMBER 2017 ZURICH JUNE 2018 BERLIN NOVEMBER 2018 BEIJING

29 Link to IFA Market Outlook Thanks to IFA s PIT and Ag Service! Link to IFA2030 website

30

31 Thank you