market outlook & ifa2030 - gpca fertilizer convention€¦ · 1/5/2019 · market outlook...

Market Outlook & IFA2030Charlotte Hebebrand, IFA

IFA Medium Term Outlook

Demand & Supply Highlights

IFA2030 Key Insights

Agenda

FERTILIZER DEMAND

New frontiers and opportunities

Global economic growth has recovered

… Until the next turbulence

-4

-2

2

0

4

10

8

6

12

14

16

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022

% China

Advanced economies

Emerging market and developing economies

World

GDP Growth

20

40

60

80

100

120

Apr-17 Apr-18

US

D p

erb

arre

l

Crude oil, Brent Spot Price

0

Apr-13 Apr-14 Apr-15 Apr-16

Source: U.S Energy Information Administration (June 2018)Source: IMF (June 2018)


Medium-term outlook: agricultural prices seen subdued

Source: OECD-FAO, 2018

600

500

400

300

200

100

0

700

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

US

D/M

etric

ton

OECD nominal price forecast

Soybeans: +2.0% / year

Rice: +0.4% / year

Wheat: +1.6% / year

Maize: +2.4% / year

Medium-term commodity price forecasts remain

conservative

-1

0

1

2

3

4

2013-17 2018-22 2013-17 2018-222013-17 2018-22

Cereals Meat Fish

2013-17 2018-22

Fresh dairy

2013-17 2018-22

Roots and tubers

2013-17 2018-22

Sugar

2013-17 2018-22

Vegetable oil

%

5

Due to populationgrowth Due to per capita demand growth (food & other uses)Slower growth infood demand, drivenmainly by population

expansion

OECD average annual growth rates


Medium-term: global demand seen close to 200 Mt by 2022/23

200

180

160

140

120

100

80

60

40

20

0

K20 P205 N

Source: IFA Agriculture, June 2018

Evolution of global fertilizer demand

Mt nutrients

199Base year 185 World Demand (incl China)

CAGR (base year 2022/23)

N +1.0%

P2O5 +1.4%

K2O +1.8%

Total +1.3%

World Demand (excl China)

CAGR (base year 2022/23)

N 1.6%

P2O5 2.1%

K2O 2.2%

Total 1.8%


Firm demand expansion in Brazil, India and ROW

0

10

20

30

40

50

60

70

-2

0

2

4

6

8

10

India

Brazil

USA

EU

China

ROW

Base year

Total fertilizer demand outlook in the top-5 fertilizer markets

Mt nutrients


Anticipated increase in demand by 2022/23

Mt nutrients

ROW +16%

CHINA ‐3%

INDIA +11%

USA +2%EU +1%BRAZIL +19%


The top-5 fertilizer markets account for

2/3 of current demand but

1/3 only of anticipated future growth

Africa + EECA = ¼ of anticipated global growth

Oceania

West Asia

Africa

E. Eur. & C. Asia

W. & C. Europe

Lat. Am. & Carib.

North America

South Asia

East Asia

Av. 2015/16 to 2017/18

Variation in 2022/23


8%

Top-2 = 55%

27%

28%

0 10 20 30 40 50 60 70New frontiers and opportunities Mt nutrients

Latin America > North America

by the end of the outlook period

11%

14%Next 2 = 25%

Lat Am, Africa and EECA increasinglyinfluential

-5% 5%

W. & C. Europe

East Asia

North America

Oceania

West Asia

South Asia

Lat. Am. & Carib.

E. Eur. & C. Asia

Africa

Lat. Am. & Carib.

South Asia

Africa

E. Eur. & C. Asia

East Asia

North America

West Asia

Oceania

W. & C. Europe

N P2O5 K2O


15% 25% 35%

Anticipated Regional Volume Expansion by 2022/23 Anticipated Relative Regional Growth by 2022/23


-1 0 1 2 3 4 5New frontiers and opportunities Mt nutrients

Leading regions

N: Lat Am, S Asia, Africa, EECA

P: Lat Am, S Asia

K: E Asia, Lat Am, SAsia

FERTILIZER SUPPLY

Global capacity evolution: 2017 to 2022

96

94

98

102

100

104

108

106

110

112

2017 2018 2019

Ammonia P acid Potash

2017=100

2020 2021 2022

Source: IFA Production & International Trade, June 2018

US$98B


2017 to 2022

Total CAPEX in new projects will reach

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

Nitrogen (Ammonia) capacity: 2017 to 2022

0

140

120

100

80

60

40

20

China RoW

Global nitrogen capacity

+3% (+5 Mt N), reaching 190 Mt N (or 232 Mt NH3)

Clear differentiated trends:

China: -6% (-4 Mt N), reaching 55 Mt N

2017: 31% of global capacity; 2022: 28%

Rest of World

+7% (+9 Mt N) reaching 135 Mt

Large increases in SA, AF, EECA


Mt N

160

2015 2016 2017 2018 2019 2020 2021 2022Source: IFA Production & International Trade, June 2018

- 20 40 60 80

China

WCE

Kuwait

Brazil

2017

2022

REDUCTIONS

Urea capacity expansions: 2017 to 2022

- 10 20 30 40

Azerbaijan Turkmenistan

Russia

Bolivia Mexico

USA

Nigeria Egypt

IndonesiaIran

India


China: -6%, reaching 68 Mt urea in 2022New frontiers and opportunities

Global urea capacity + 5% (+10 Mt), reaching 226 Mt in 2022

50% in 2018-19; 50%, 2021-22; but -3 Mt in 2020

30 new units, of which 10 in China

Mt urea

EXPANSIONS

2017 2022

P Acid & PP capacity developments: 2017 to 2022

P Acid capacity +6%, reaching 64.3 Mt P2O5

10 new PA units, no new MGAunit

Mt P2O5

8.6 Mt3.8 Mt

Morocco

SaudiArabia

Egypt

India

Kazakhstan

China

Turkey

Russia

Brazil

72% share of

PP capacity

expansions



- 500 1000 1500 2000 2500 3000 Mt P2O5

PP capacity +3% (+6 Mt), reaching 53 Mt P2O5

90% dedicated to DAP plus flexibility

Potash capacity developments: 2017 to 2022

92

94

96

98

100

102

104

106

108

2017 2018 2019 2020 2021 2022

Global potassium capacity +10%,

reaching 64.6 Mt K2O (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

World

99

Mt MOP eq

110



Supply / Demand outlook: 2017 to 2022

2017 2018 2019 2020 2021 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)

158162 160

155

143 144 146 148

162

150

163

152

170

160

150

140

130

PHOSPHORIC ACID

Mt P O+1.8% pa (10% to 2022)

+1.7% pa (9%)

Potential surplus nearly static at 2 Mt P2O5

48 49 50 51

46 47 48 49

52 52

50 50 SUPPLY

DEMAND

55

50

45

40

POTASSIUM

Mt K O SUPPLY

DEMAND

+3.2% pa (17% to 2022)

+1.9% pa (9.5%)

Potential surplus nearly doubling to 8 Mt K2O

(from 4 Mt K2O)

46

Sources: IFA Agriculture and IFA Production & International Trade, June 2018


49 51 53 54 54

42 43 44 45 45 46

60

55

50

45

40

Government policies increasingly affect fertilizer demand & supply around the World

EU New Fertilizer

Regulation, still

in discussion

CHINA: environmental

policies impacting use and

production; E-10

NIGERIA’sPresidential Fertilizer Initiative

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

TANZANIA’s BulkProcurement System

CANADA: Federal

government imposing

carbon pricing systems

USA: State level

environmental regulationsand litigation

losses to the environment (UN Environment, FAO, OECD)New frontiers and opportunities

TRADE: Rise in anti-dumping,

import tariffs, non tariff barriers;

US-China; NAFTA; US-EU;Ukraine-Russia

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 50-52 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

IFA 2030 KEY INSIGHTS


READY,

SET, GO

NEW

HORIZONS

COMMODITY

CLASSIC

REDUCED

DYNAMISM

Scenarios in brief

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.New frontiers and opportunities

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.


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.

OPERATING

CONTEXT

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.New frontiers and opportunities

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.


Innovation & disruption1.

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 Disruptive technologies create risks

and opportunities.

Farmers & partners2.


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.

Insights & implications

Fertilizer demand shifts3.

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.

Regulations & pressures4.


o Regulatory landscape will expand.

o Greater focus on environmental

stewardship, resource competition and

protection, SHE & security will impact

fertilizer production, distribution and

application.


Transparency & accountability5.

o Industry will face requirements for more

transparency around environment and

health impacts.

o Demands for measurable indicators and

traceability, enabled by technology.

o Pursuit of sustainability as important as

market share and shareholder value.

License to operation & reputation6.

o Despite the critical role fertilizers play in

feeding the world and contributing to

improving people’s lives, fertilizers are

not well-understood.

o In order to maintain its license to

operate, the industry needs to beseen

as an integral part of the agriculture

value chain.

o Need for much wider engagement with

partners and external stakeholders



Next steps

Options

NOVEMBER 2017

ZURICH

JUNE 2018

BERLINNew frontiers and opportunities

NOVEMBER 2018

BEIJING

Link to IFA Market Outlook

www.ifastat.org/market-outlooks

Thanks to IFA’s PIT and Ag Service!

Link to IFA2030 website

www.fertilizer.org/En/About_IFA/IFA_2030/IFA_2030.aspx

http://www.ifastat.org/market-outlooks

http://www.fertilizer.org/En/About_IFA/IFA_2030/IFA_2030.aspx

www.ifa-amman2018.org

http://www.ifa-amman2018.org/

Thank you

www.gpca.org.ae

http://www.gpca.org.ae/

market outlook & ifa2030 - gpca fertilizer convention€¦ · 1/5/2019 · market outlook...

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