Steering The Fertilizer Industry Through Challenging Times

Transcription

1 Steering The Fertilizer Industry Through Challenging Times Dr. Abdulrahman Jawahery IFA Chairman & President, GPIC Keynote Address GPCA Fertilizer Convention, 6-8 September, Dubai

2 THREE CHALLENGES AND OPPORTUNITIES! Less than ideal market conditions and a possibly persistent oversupply of nutrients, increasing concerns and pressures with regard to nutrient losses to the environment, and the misuse of fertilizers for criminal/terrorist activity.

3 CROP PRICES REMAIN LOW Relative price stability since mid-2015 Prices will likely remain low in 2016/17 Low returns from previous crop Commercial farmers tend to reduce and optimize fertilizer application rates Source: World Bank (April 2016)

4 GLOBAL FERTILIZER DEMAND TO ALMOST REACH 200MT BY 2020/21 Medium-term Forecast (Mt nutrients) K20 P205 N BASE YEAR Average Annual Change (% p.a.) Base Year 2020/21 N +1.2 P 2 O K 2 O +2.3 Total Source: IFA Agriculture

5 AGGREGATE REGIONAL FERTILIZER DEMAND Medium-term Outlook (Mt nutrients) East Asia 22% South Asia 33% North America Lat. Am. & Carib. W. & C. Europe E. Eur. & C. Asia Africa West Asia Oceania 22% Av. 2013/14 to 2015/16 Variation in 2020/21 Top-3 = 77% Source: IFA Agriculture

6 GLOBAL UREA SUPPLY DEVELOPMENTS NET UREA SUPPLY GROWTH IN KEY REGIONS Other EECA South Asia North America 2015 to 2020 GLOBAL UREA SUPPLY/DEMAND OUTLOOK Mt urea 250 Supply 200 Demand Africa East Asia Balance Mt urea Source: IFA Production & International Trade 2016

7 GLOBAL PHOSACID SUPPLY DEVELOPMENTS NET P ACID SUPPLY GROWTH IN KEY REGIONS Others GLOBAL P ACID SUPPLY/DEMAND OUTLOOK Mt P2O Supply West Asia 2015 to Demand 30 East Asia 20 Africa 10 Balance Mt P2O Source: IFA Production & International Trade 2016

8 GLOBAL POTASH SUPPLY DEVELOPMENTS NET P ACID SUPPLY GROWTH IN KEY REGIONS Others GLOBAL P ACID SUPPLY/DEMAND OUTLOOK Mt MOP Supply East Asia 2015 to Demand 50 North America EECA Balance Mt MOP Source: IFA Production & International Trade 2016

9 LOW FERTILIZER CONSUMPTION LARGER YIELD GAPS

10 THE NEED TO FOCUS ON AFRICA Achieving the Abuja Target of 50 kg nutrients/ha would require quadrupling current consumption levels in SSA, from 3.4 Mt in 2014 to some 14 Mt, i.e. a 10 Mt increase (~6% of current world consumption) Source: IFA, FAO

11 RELATIVE CONSUMPTION OF N, P2O5 AND K2O IN INDIA AND IN THE REST OF THE WORLD (ROW) N P2O5 K2O 100% 80% 60% 40% 20% 0% INDIA ROW

12 BENEFITS/DRAWBACKS OF EEF SRF/CRF/SF Benefits of EEF o Savings in labour, energy and time o Reduce nutrient losses (leaching, runoff, volatilization, nitrification) Main drawback o Higher price against conventional fertilizers Market size in 2014 o Estimated at Mt products o Growth potential between 2014 and 2019: close to 7% per annum o SR/CR urea represents a very small fraction of world s fertilizer urea use GLOBAL DISTRIBUTION OF EEC CONSUMPTION IN 2014 Europe Latin 6% America 8% North America 10% India 50% Other 4% China 22% Note: India s EEF market is made exclusively of neem-coated urea Source: IHS 2015

13 THE «WAGES» OF TOO MUCH NITROGEN Water quality Air quality Greenhouse balance Ecosystems Soil quality Source: European Nitrogen Assessment, 2011

14 NUE TYPICAL EVOLUTION OF NITROGEN USE EFFICIENCY (NUE) OVER TIME 100% Sub-Saharan Africa Different countries are on different points on the curve India Developed Countries Brazil China Crop yield NUE = N output Sum of N inputs N INPUTS Fertilizer-N + Manure-N recycled + Crop BNF + Atmospheric deposition + (irrigation, biosolids ) N Market Share in 2015/16 Dev ed countries 26% China 29% India 14% Brazil 7% SSA 2% ROW 22%

15 REDUCED N LOSSES WITH CRFS N SOURCE AND NH3 LOSS. LAB INCUBATION Source: Dr. W. Thornberry, Sturgis, KY; Dr. S. Edelhar, University of Illinois

16 OPPORTUNITIES IN CHALLENGING UREA MARKET CONTEXT With a 63% share of all N fertilizer consumption (2013), urea offer the greatest opportunity for innovating nitrogen fertilizers in terms of NUE gains and volumetric sales EEF products perform well, but lack market scale and large plant capacity Only 5% of the world nitrogen currently converted to EEF (2014) Nitrogen efficiency technology what it does: o adds differentiation o generates performance o brings value Trends creating strong demand for EEF Rising regulations and restrictions on fertilizer use o But also EEFs, recently (eg draft EU regulation) Urea capacity growth exceeding demand growth, putting pressure on urea margins o Producers looking towards added-value markets Global urea supply & demand cumulative growth POTENTIAL SURPLUS Supply Demand Source: adapted from Koch Agronomics 2015; IFA PIT Committee 2016

17 LIMITING THE MISUSE OF NITROGENOUS FERTILIZERS: PROTECT & SUSTAIN CERTIFICATION Protect & Sustain was developed by IFA members with independent auditors for IFA members. It has become the de facto global product stewardship standard for fertilizers. Protect & Sustain includes all relevant elements of ISO and OHSAS certifications which gives many companies a quick start. A major difference vis-à-vis Responsible Care is that Protect & Sustain includes 20 product security-specific questions. BUSINESS BENEFITS include: Safe working conditions Protected environment Safe communities Good reputation More profitability Less risk for everyone

18 LIMITING THE MISUSE OF NITROGENOUS FERTILIZERS: PROTECT & SUSTAIN HALL OF FAME 33 CERTIFIED FERTILIZER PRODUCERS (N, P, K) IN 44 COUNTRIES Countries: Austria, Argentina, Bahrain, Belgium, Brazil, Cameroun, Canada, Chile, China, Czech Republic, Croatia, Egypt, France, Finland, Germany, Ghana, Greece, Hungary, India, Israel, Italy, Kenia, Korea, Lithuania, Netherlands, Norway, Malaysia, Mexico, Morocco, Pakistan, Poland, Portugal, Romania, Qatar, South Africa, Spain, Sweden, Thailand, Trinidad & Tobago, UAE, UK, USA, Vietnam. Now available for non-producers, as well. August 2016

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20 ATTENDANCE: 100 delegates from 40 countries we hope to see your teams there, too!!! Safety, Health, Environment (SHE) Excellence: A Foundation for Fertilizer Production 2.0