world phosphate availability and supply-demand … phosphate availability and supply-demand in india...

World Phosphate Availability and

Supply-Demand in India

FAI Management Development Program

Chandigarh

April 2014

Sujata V

Market Analyst

Mosaic India Private Limited

World Phosphate Availability

• Overview

• Phosphate rock – production & reserves

• Phosphate fertilizers – production & trade

• Future prospects


3

Critical role of plant nutrients

Plant nutrients are responsible for 40% to 60% of crop yields

Vital role in meeting the challenge of feeding more than nine billion people in 2050

4

Dr. Norman Borlaug

1914-2009

“Farmers can feed the world. Better seeds and fertilizer, not romantic myths, will let

them do it.”

Dr. Norman Borlaug

Wall Street Journal

July 30, 2009

“This is a basic problem – to feed 6.6 billion people. Without chemical fertilizer, forget

it. The game is over.”

Dr. Norman Borlaug

New York Times

April 30, 2008

Overview of Phosphates

The production process - making phosphorus water soluble

Key inputs: phosphate rock mineral ore, sulphur and ammonia

Global agricultural use: ~41 million MT P2O5 in 2012 or more than 120 million MT of

product

Leading producers: USA, China, Morocco/North Africa, Russia 5

DAP/MAP/TSP63%

SSP15%

NP/NPK19%

Other3%

P2O5 Use

by

Product

Fruits & Veg.

18%

Corn & Other

Coarse Grains17%

Wheat

16%

Oilseeds

13%Rice

12%

Other

24%

P2O5 Use

by

Crop

SOURCE: IFA, FERTECON AND MOSAIC SOURCE: IFA, FERTECON AND MOSAIC

• Overview





6

7

Phosphate Rock Production

Phosphate rock reserves and resources

8

Resource Estimates

More than 1,525 years of

production at current rates

Reserve Estimates

Up to 350 years of production

at current rates

Source: USGS and IFDC

USGS

(2013)

Reserves

67

IFDC

(2010)

Preliminary

Reserve

Estimate

(Product)

60

IFDC

(2010)

Preliminary

Resource

Estimate

290

0

50

100

150

200

250

300

Billion Tonnes

• Overview





9

Global phosphate production (DAP/MAP/TSP)

10

0

10

20

30

40

50

60

70

95 97 99 01 03 05 07 09 11 13E

Mil Tonnes Global DAP/ MAP/ TSP Production

Other United States Morocco China0 10 20 30

Mil Tonnes

Top Producing Countries

China

USA

India

Morocco

Russia

Brazil

Saudi Arabia

Tunisia

Mexico

Australia

Source: CRU/FRC and Mosaic Source: CRU/FRC and Mosaic, 2012

China – Accounted for ALL of the net growth in phosphate supply since 1995

– Transition from low-analysis to high-analysis phosphate products

Future supply growth largely from new low cost capacity – Morocco

– Saudi Arabia

Phosphate product trade

11

0

5

10

15

20

25

95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13E

Mil Tonnes Global Phosphate Product Imports

(DAP/ MAP/ TSP)

China Other

Source: CRU/FRC and Mosaic

0.0 2.5 5.0 7.5Mil Tonnes

Top Importing Nations

India

Brazil

Bangladesh

Argentina

Australia

USA

Pakistan

Vietnam

Thailand

Canada

0.0 2.0 4.0 6.0Mil Tonnes

Top Exporting Nations

USA

China

Morocco

Russia

Tunisia

Saudi Arabia

Lithuania

Mexico

Jordan

Australia

Source: CRU/FRC and Mosaic, 2012

• Overview





12

Farmers will need to harvest record

area and reap ever increasing yields

in order for global grain and oilseed

supply to keep pace with projected

demand.

The Food Story by the Numbers

Steady and predictable demand growth

Population and per capital income are key

drivers

Long Term Grain and Oilseed Demand

The food story remains compelling

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

80 85 90 95 00 05 10 20 30 40 50

Mil Tonnes

Source: USDA and Mosaic

World Grain and Oilseed Use

Actual for Biofuels Actual Forecast for Biofuels Forecast

1.75

2.00

2.25

2.50

2.75

3.00

3.25

3.50

3.75

775

800

825

850

875

900

925

950

975

80 85 90 95 00 05 10 15 20 25 30

MT HaMil Ha World Harvested Area and Average Yield

Actual Area Forecast Area Actual Yield

Required Yield 1980-10 Yield Trend

14

Increase to 64-66 million MT DAP/MAP/TSP

3.5% CAGR since 2000

Record prospects in Brazil

Rebound in demand from India

Positive prospects in nearly all other regions

Expected 2014 Phosphate Demand

Source: CRU/FRC, IFA and M osaic

18%

21%

19%

10%

22%

10%

199538 mil tonnes

33%

27%7%

13%

14%

6%

201263 mil tonnes

China Asia and Oceania Europe and FSU

Latin America North America Africa and Mideast

Global phosphate demand outlook

51

47

53

59

62 63 63

64-66

30

35

40

45

50

55

60

65

70

00 01 02 03 04 05 06 07 08 09 10 11 12 13E 14F

Global Phosphate ShipmentsLikely Scenario

MMT Product

DAP/ MAP/ MES/TSP

Source: CRU/FRC and Mosaic

Global Phosphate Demand

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

100%

0

10

20

30

40

50

60

70

80

90

100

2000 2004 2008 2012 2016F 2020F

Op RateMMT

Tho

usa

nd

s Source: CRU/FRC and Mosaic

Global Phosphate Capacity, Production and Oper RateLikely Scenario

Capacity Production Acid Op Rate

Positive and more stable supply outlook

Additional capacities in Saudi Arabia, Jordan & Morocco

At existing operating rate, growing capacity will be able to keep pace with growth in demand

Saudi Arabia

Ma’aden looks to benefit from improved Indian demand prospects for 2014/15

and will remain one of the two dominant suppliers

Remains to be seen when Ma’aden Phase 1 ramps up to capacity

Expansion at Ras Al-Khair scheduled for 2016

0.0

0.5

1.0

1.5

2.0

2.5

3.0

00 01 02 03 04 05 06 07 08 09 10 11 12 13E 14F

Mil Tonnes

DAPSaudi Arabia Phosphate Exports

Export

Production Capacity

Source: CRU February 2014

• Overview

• Phosphate demand trend

• Recent changes in Phosphate demand

• Phosphate supply



18

Phosphate use over 7.5 million MT

Grain & oilseeds account for >75% of P2O5 consumption

5% of India’s Phosphate use is from domestic sources

India imports phosphates from various origins and in different forms

DAP supplies over 60% of India’s phosphate requirement

India Phosphate Facts

SOURCE: FAI & MOSAIC SOURCE: FAI & MOSAIC

19

P2O5 Use

by Crop

Average

P2O5

Sales ‘09/10-’11/12

Average all-India P2O5 use is ~38

kg/ha vs. ~100 kg/ha in China

P2O5 usage is down to an

estimated 28 kg/ha in 2013-14

Under application of P in almost

all crops – tremendous upside

exists

TN

K

R

KTK

AP

OR

MH

GJ

CH

AS

WB

JH

BH

MP

UK

RJ

UP

PB

HP

HR

J&K

Color P2O5 Application*

rate, kg/ha

>50

21-50

11-20

<10

* Does not include P2O5 from SSP

Phosphate use in India

SOURCE: FMS & FAI

20

• Overview






21

India’s P use grew at an impressive 6.5% CAGR over the past 3 decades

Phosphate Demand Trend

SOURCE: FAI

22

1.2

8.0

6.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

1980-81 1984-85 1988-89 1992-93 1996-97 2000-01 2004-05 2008-09 2012-13

Mill

ion M

T P

2O

5

NBS

in

tro

du

ced

• Overview






23

Sharp decline in phosphate use after 2010-11, driven by hike in prices Decline in 2013-14 estimated ~18% from 2012-13

DAP use in 2013-14 declined by 25% from 2012-13

Recent changes in P demand

SOURCE: FAI & MOSAIC

24

5.5

6.5 7.3

8.0 7.9

6.7

5.5

0.0

1.5

3.0

4.5

6.0

7.5

9.0

Mill

ion

MT

P2O

5

Phosphate Use

7.3

9.4 10.2

11.1 10.8

9.2

6.9

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Mill

ion

MT

DA

P

DAP Use

12.0

22.5

↓ 8.2 ↑ 7.4

↑ 11.3

MRPApr'11

India CFRimpact

Subsidyimpact

Exch rate impact

MRPApr'14

In 000 INR/MT

MRP changes in DAP – drivers

25

SOURCE: MOSAIC ANALYSIS

INR 19,76312,350

INR 44.4 62/ US$

$612 $480

12.0

22.5

↓ 8.2 ↑ 7.4

↑ 11.3

MRPApr'11

India CFRimpact

Subsidyimpact

Exch rate impact

MRPApr'14

In 000 INR/MT


26


INR 19,76312,350

INR 44.4 62/ US$

$612 $480

$300

$400

$500

$600

$700

Apr-11 Apr-12 Apr-13 Apr-14

US$/MT India CFR

12.0

22.5

↓ 8.2 ↑ 7.4

↑ 11.3

MRPApr'11

India CFRimpact

Subsidyimpact

Exch rate impact

MRPApr'14

In 000 INR/MT


27


INR 19,76312,350

INR 44.4 62/ US$

$612 $480

19.8

14.4 12.4

10

15

20

25


000 INR/MT NBS

12.0

22.5

↓ 8.2 ↑ 7.4

↑ 11.3

MRPApr'11

India CFRimpact

Subsidyimpact

Exch rate impact

MRPApr'14

In 000 INR/MT


28


INR 19,76312,350

INR 44 62/ US$

$612 $480

44.0

68.4

62.3

40

45

50

55

60

65

70


INR/US$

12.0

22.5

↓ 8.2 ↑ 7.4

↑ 11.3

MRPApr'11

India CFRimpact

Subsidyimpact

Exch rate impact

MRPApr'14

In 000 INR/MT


29


INR 19,76312,350

INR 44 62/ US$

$612 $480

Additional burden from weaker INR

Subsidy saving achieved

3.0

2.4

3.0

3.4

2.8

2.1

2.6

1.2 1.1

2.0

2.5

1.9

1.5

3.8

0.0

1.0

2.0

3.0

4.0

83/84 86/87 89/90 92/93 95/96 98/99 01/02 04-05 07/08 10-11 13-14f

N:P Use P:N Price

Balance in prices helps the N:P use ratio to improve

30

Farmer price has a great impact on P Use

SOURCE: FAI & MOSAIC

• Overview






31

Phosphate Production

India is the 3rd largest Phosphate producer in the world

19 DAP/ NP-NPK plants in India

Along the coast

P2O5 capacity of 4.9 million MT, operating rate ~72%

Supplies ~50% of India’s P requirement

32

TN

WB

JH

PPL Paradeep

P2O5 – 331 mmt

DAP/ NP/ NPK

TCL Haldia

P2O5 – 304 mmt

DAP/ NPK

IFFCO Paradeep

P2O5 – 803 mmt

DAP/ NP/NPK

Zuari Goa

P2O5 – 244 mmt

DAP/ NPK

MCFL Mangalore

P2O5 – 109 mmt

DAP/ NP/ NPK MFL Manali

P2O5 – 143 mmt

NP/ NPK

CIL Kakinada

P2O5 – 616 mmt

DAP/ NP/NPK

CIL Vizag

P2O5 – 312 mmt

NP/ DAP

CIL Ennore

P2O5 – 60 mmt

Greenstar Tuticorin*

P2O5 – 211 mmt

DAP/ NP

FACT Cochin

P2O5 – 97 mmt

NP

FACT Udyogamandal

P2O5 – 30 mmt

NP

IFFCO Kandla

P2O5 – 910 mmt

DAP/ NP/NPK

GSFC Sikka

P2O5 – 332 mmt

DAP/ NPK

Hindalco Dahej

P2O5 – 184 mmt

DAP

RCF Trombay

P2O5 – 117 mmt

NP/ NPK

Deepak Taloja

P2O5 – 55 mmt

NP

GNFC Bharuch

P2O5 – 29 mmt

ANP

GSFC Vadodara

P2O5 – 40 mmt

NP

SOURCE: FAI

DAP/ NP

DAP/ NP/ NPK

Phosphate Imports

P imports to India are in various forms & origins

– Phos acid (24%), Phos rock (27%), Finished product (48%)

DAP imported from various origins

33

2.8

6.2 5.8

7.5 7.2

5.7

3.4

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14e

Million MT DAP imports by origin

US China Saudi Arabia Others

SOURCE: FERTECON & MOSAIC

• Overview






34

Lower channel opening inventory

vs. past 2 years

Stable farmer price

DAP subsidy unchanged at

INR12,350/MT for 2014/15

Good farmer sentiments

Attractive economics

Good monsoon

Reservoir levels ↑

DAP sales estimated to grow back

to 2012-13 levels

Import demand projected to grow

by 56%

India poised for a rebound in 2014-15

6.7 6.97.3

9.410.2

11.1 10.8

9.1

6.9

9.2

0.0

2.0

4.0

6.0

8.0

10.0

12.0

06 07 08 09 10 11 12 13 14F 15F

Mil Tonnes

Fertilizer Year Ending March 31

India DAP Sales

Source: FAI and Mosaic India

1.2

1.81.3

3.33.6

5.5

3.84.2

2.6

3.3

1.21.0 1.5

3.02.2

2.13.4

1.5

0.9

2.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

06 07 08 09 10 11 12 13 14F 15F

Mil Tonnes

Fertilizer Year Ending March 31

India DAP Imports

Kariff (Apr 1-Sep 30)

Rabi (Oct 1-Mar 31)

Source: FAI and Mosaic India

Long term demand drivers intact

Increased food demand

Population growth @ 1.6%

Better diets

Attractive farmer economics & need for better yields

Balanced N, P, K prices

P & K application rate

Balanced N:P & N:K use ratio

36

Phosphate demand forecast

Phosphate demand derailed from its trajectory

When will use be back to normal?

37

5.5 6.5

7.3 8.0 7.9

6.7 5.5

9.1 9.3 9.5

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14e 2014-15f 2015-16f 2016-17f

Mil

lio

n M

T P

2O

5

SOURCE: FMS & REPORT OF THE WORKING GROUP ON FERTILIZER INDUSTRY FOR 12TH FIVE YEAR PLAN, FAI

THANK YOU!

FAI Management Development Program

Chandigarh

April 2014

Sujata V

Market Analyst

Mosaic India Private Limited

world phosphate availability and supply-demand … phosphate availability and supply-demand in india...

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