High crop prices: Positive for fertilizer demand what about supply? Dag Tore Mo, Head of Market Intelligence

Transcription

1 High crop prices: Positive for fertilizer demand what about supply? Dag Tore Mo, Head of Market Intelligence

2 Key global fertilizer products Nitrogen N Ammonia 4% Other 11% DAP/MAP 6% Potash K 2 O Phosphate P 2 O 5 NPK 23% Other 5% MOP/SOP 72% NPK 9% AN/CAN 8% UAN 5% 103 million tons Urea 57% SSP 13% NPK 21% TSP 6% Other 7% DAP/MAP 52% 27 million tons 40 million tons Source: IFA 2010 (nutrient totals) and 2008 (product split)

3 A third year of lower grain stocks, very supportive Million tons % 30% % 20% Consumption 15% 10% 68 days inventory Production 5% F 0% F Source: USDA November 2012

4 Main agricultural commodity prices at historic high levels USD/t Wheat (HRW US Gulf) TD12 Oct Rice (Thailand) USD/t TD12 Oct USD/t Corn (US Gulf) TD12 Oct Source: World Bank, November 2012 USD/t Soybeans (cif Rotterdam) TD12 Oct Average prices

5 Fertilizer prices not very different from other commodities Index 2000 = 100) Urea fob Black Sea DAP fob Tampa MOP fob Vancouver Oil Brent Wheat fob US Gulf TD Source: International publications

6 Relationship between wheat and urea prices ( from 2003 ) 900 Urea fob Black Sea y = 1,3164x - 9,6469 R² = 0, Wheat fob US Gulf

7 Main fertilizer commodity prices USD/mt 700 Urea fob Black Sea DAP fob Tampa MOP fob Vancouver Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Source: International publications

8 Profitability of investment in mineral fertilizers Yield response (monetary value) to N fertilizer rate Income USD/ha Yield, ton/ha 10,0 9,0 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0, Fertilizer application, kg N/ha The investment in nitrogen fertilizer is highly profitable for growers Fertilizer investment: 261 USD/ha Net return: 1,745 USD/ha Net return > 6 x investment Source: Winter wheat yield data: Long term trial, Broadbalk, Rothamsted (since 1856).

9 Apparent nitrogen consumption ex. China 100 Standard deviation of annual growth rates: 4%-points 95 million tons nitrogen The trend from shows a growth rate of 2.1%/year Source: IFA

10 10 largest ammonia producers in ,0 50,0 40,0 30,0 20,0 10,0 0,0 China Russia India USA Indonesia Trinidad Ukraine Canada million tons ammonia Egypt Saudi Arabia Source: IFA

11 Main urea flows 2011 Million tonnes Source: IFA 2011

12 Net urea export from China kt product Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

13 Lower Chinese urea export price in 2012 Chinese export tax 1 Jul 1 Nov Domestic urea price in China Fob China 700 RMB/t Domestic price ex works, RMB/t Jan Apr Jul Oct * China Fertlizer Market Week

14 Projected nitrogen capacity additions outside China in line with historical consumption growth Year 2011 China 36% Pakistan 24% 2012 China 60% Driving regions Urea capacity growth relative to nitrogen capacity World Excluding China World Excluding China Qatar 14% 2013 China 63% Algeria 14% 2014 China 45% Egypt 13% 2015 China 42% Saudi Arabia 9% Pakistan 37% Iran 18% Qatar 34% Vietnam 20% Algeria 38% UAE 18% Egypt 25% Algeria 16% Saudi Arabia 15% Brazil 14% 1.2% (1.3%) 1.2% (1.3%) 3.5% (4.1%) 2.2% (2.1%) 4.4% (2.7%) 2.6% (3.1%) 1.7% (1.0%) 1.5% (1.2%) 2.6% (1.2%) 2.5% (1.9%) Gross annual addition ~2.0% Assumed annual closures ~0.5% Net annual addition ~1.5% Trend consumption growth from % 2.1% Source: Fertecon urea update October Consumption data source is IFA. Previous update in brackets.

15 Continued project delays Million tons Additional urea capacity 8 7, ,2 0,4 1,2 Fertecon assumptions: 1 new site in Egypt from Jul 13 Startup in UAE in Jan ,5 Startups in Algeria in Jul 12, Jan 13 and Jul , Oct 11 est Oct 12 est Oct 12 est. Source: Fertecon urea updates

16 Ten largest phosphate rock producers Mt Rock Source: IFA

17 Record net phosphate exports from China Million tons P 2 O 5 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0, DAP MAP TSP Other NP Source: IFA, BOABC for ( Assuming 25% P 2 O 5 in Other NP, included from 2009 )

18 In 2011 global phosphate rock production increased by 3.8% to 191 million tonnes Mt Rock annual growth rate 2.1% per year Excluding China Source: IFA

19 Main DAP/MAP/TSP flows 2010 (Mt P2O5) Source: IFA

20 In 2011 global potash production increased by 8.2% to 34.3 million tonnes K2O trend growth rate 1.0% per year 30 Mt K2O Source: IFA

21 Ten largest potash producers Mt K2O Source: IFA

22 Main potash flows 2011 (Mt K2O) Source: IFA

23 P and K decades of surplus capacity gone USD/mt Rock fob Morocoo MOP fob Vancouver Source: International publications

24 Phosphate rock reserves are not limited (numbers are billion tons) Source: CRU

25 Potash Exploration Activity, no lack of resources, it is a question of price PERU GrowMax Agri Corp Salmueras Sudamericanas (SOP) BOLIVIA Comibol ARGENTINA Allana Potash Dajin Resources Lithium Americas Corp Lithium One Marifil Mines Orocobre Rincon Lithium Rodinia Lithium ALBERTA First Lithium Resources Grizzly Discoveries Pacific Potash Corp. Softrock Minerals Universal Potash UNITED KINGDOM Sirius Minerals (SOP) NEWFOUNDLAND& NEW BRUNSWICK Atlantic Potash Corp. Red Moon Potash UNITED STATES American Potash IC Potash (SOP) Mesa Uranium NA Potash Developments Passport Potash Potash Minerals Potash Ridge (SOP) Prospect Global Resources Red Metal Sirius Minerals Universal Potash SASKATCHEWAN BRAZIL Verde Potash Brazil Potash Corp. Lara Exploration Petrobras Aguia Resources Redstone Resources Rio Verde Minerals Vale Western Potash MANITOBA BHP Billiton BHP Billiton Canada Potash Corp. Western Potash Encanto Potash Karnalyte Resources North Atlantic Potash (Acron) Western Potash Vale ERITREA& ETHIOPIA Allana Potash BHP Billiton Ethiopian Potash Corp Ethiopotash NGEx Resources Nova Potash Sainik/ IFFCO South Boulder Mines CONGO MagMinerals Congo Potash Co. Elemental Minerals AUSTRALIA Sirius Minerals Highfield Resources Potash West Rum Jungle Resources South Boulder Mines WPG Resources RUSSIA(URALS) Acron EuroChem KAZAKHSTAN Fortis Mining Satimola MONGOLIA General Mining Corp. TURKMENISTAN Turkmenkhimiya THAILAND& LAOS ASEAN Potash Mining Asia Pacific Potash (Ital-Thai) Mingda Thailand Sinoagri Mining Sinohydro Mining Viet-Lao Salt & Chemicals Zhongliao Mining Kaiyuan Potash AsiaBaseMetals

26 Ballpark investment costs - Greenfield Potash 2 billion USD for a 1 million ton/year potash mine, USD2000/annual ton Time from start to mine output: 8-10 years Phosphate rock 1.2 billion USD for a 2 million ton/year mine, USD600/annual ton Time from start to mine output: 6-10 years Ammonia/Urea 1.5 billion USD for a 1 million ton/year urea plant, USD1500/annual ton Time from start to production: 4-6 years Source:Department of Natural Resources Canada, British Sulphur(Fosfertil), Stamicarbon