Fertilizer Trends: A large product variety
Mounir Halim
GPCA, Dubai
7th Sep 2016
London
Houston
Washington
New York
Portland
Calgary
Santiago
Bogota
Rio de Janeiro
Singapore
Beijing
Tokyo
Sydney
Dubai
Moscow
Astana
Kiev
Porto
Johannesburg
Riga
Market Reporting
Consulting
Events
Overview
• Nitrogen’s struggle: Oversupply overshadowing nutrient
demand with limited forward visibility
• Phosphates Resistance to price pressure but downtrend
continued reflecting a general trend
• India’s fluctuation, China’s shock absorber and Africa the
next frontier
Copyright © 2015 Argus Media Ltd. All rights reserved.
Argus FMB
Dedicated global experts
Large portfolio
Price assessments used globally
Copyright © 2015 Argus Media Ltd. All rights reserved.
FMB
Argus FMB Wide Coverage and widely used
• Weekly publications: prices and market intelligence
• Monthly publications: forecast and market trends
• Annuals : long term strategic forecast
RESOURCES
INTERMEDIATES
SINGLE
COMPOUNDS
MIXED
COMPOUNDS
AGRI
Supply
RETAIL
POTASH
Gas
Integrated Urea Producers
Ammonia
Sulphur
Rock
N-Fertilisers
Blenders /
Distributors
DAP/MAP/TSP
MGA
NPK
Financial institutions / NGOs / Governments…
New weekly report
Copyright © 2015 Argus Media Ltd. All rights reserved.
COOPS
AGRI-INPUTS
RETAIL NETWORK
Indexation price assessments in contracts
Argus Baltic fob
Argus Algeria, Egypt fob
Urea index
European Market*
Argus Nola fob
N and P Index
Urea index
Global trade
Argus fob Tampa
DAP index
Argus fob Morocco
Phosphates
N&L America, Asia
Argus fob Yuzhny
Urea index
Global trade
Argus AG fob
Urea, DAP index
Global trade
Argus Brazil cfr
Urea, MAP index
MOP Nego
US, Russian, Moroccan, and Saudi Origins
Copyright © 2015 Argus Media Ltd. All rights reserved.
UREA
lower fluctuations, lack of visibility and
increased risk
Floor price and Volatility
Capacity and Forecast
Copyright © 2015 Argus Media Ltd. All rights reserved.
FMB
Ammonia Cost Curve flat-lining in the short-term
Source: Argus FMB Ammonia Cost & Margin Service
Notes: Tonnage refers to merchant ammonia supply potential
Copyright © 2015 Argus Media Ltd. All rights reserved.
Nitrogen Over supply a dominant theme in 2016
overshadowing nutrient demand
Plants returning from
turnaround increasing
availability
new capacities
AG 2016 average price,
$201, 80$/t (28pc) lower
than in 2015
Increasing product
availability
Urea prices bottomed out
after India Tender at $180
Healthy demand
– market rebound
Copyright © 2015 Argus Media Ltd. All rights reserved.
More than 13mn t exports
in 2015. 30% less in 2016
Capacity to export but
setting a floor price
Urea prices
Supply/Demand
fluctuations
driven by price
range $180-200
Lowest since 2004
•
Oversupply, a dominating theme of urea market in 2016
•
Near the end of a five year downtrend in prices
•
Searching for a level at which old capacity will be closed
•
Needing to find a new equilibrium to absorb US capacity
Copyright © 2016 Argus Media Ltd. All rights
reserved
Nitrogen price 10+ year low
•
Lowest levels since 2004 – new
dynamic
•
$180-$200 range. Demand
Rebound vs. Delay Purchase
•
Expect range to remain for
months to come – less volatility
•
End of mini-Rally $180  $200:
Plant outages and turnarounds
•
Return of Egypt and FSU raising
availability: Buyers not attracted
by current prices
5 Year Range
Olympic average
2016 prices
.
Copyright © 2015 Argus Media Ltd. All rights reserved.
China
Jan-Jul
2014
2015
2016
Global
5.283
7.749
5.778
India
1.592
3.03
1.617
30%
39%
28%
MS in India
In million t
•
Prices bottomed at $180 soon after Indian tender in July
•
Difficult price for Chinese and other supplier – setting international floor price $180 fob
china
•
Chinese exports down 25pc (Jan-Jul). Expected to fall at 9mn tonnes for 2016: 4.7mn
tonnes fall year one year
•
Chinese shrinking exports to eventually be outweighed by new on-stream capacities
Copyright © 2015 Argus Media Ltd. All rights reserved.
Fertilizer Floor Price Dynamics
FACTORS INFLUENCING
FERTILIZER FLOOR PRICE
Gas
projects
Coal
Crops
currency
Curtail
Economy
FLOOR
PRICE
floor
Tightening of spread
floor
2015- 2016
Low to date
floor
floor
Copyright © 2015 Argus Media Ltd. All rights reserved.
floor
Urea Price Volatility tightening
Urea Middle East: Jan – Aug 2015
$/t fob
$
Week to week price delta, left axis
Urea price, right axis
Standard Deviation: 0.0272
Source: Argus FMB
Copyright © 2015 Argus Media Ltd. All rights reserved.
Urea Price Volatility tightening
Urea Middle East: Jan - Aug 2016
$/t fob
$
Week to week price delta, left axis
Urea price, right axis
Standard Deviation: 0.0250
Source: Argus FMB
Copyright © 2015 Argus Media Ltd. All rights reserved.
New capacities
• Before the end of 2016, new plants:
◦ in Malaysia (1.2m tonnes/year)
◦ Iran (1.1m tonnes/year
◦ US (1.2m tonnes/year
◦ Joining Algeria’s 1.2m tonnes/year and Nigeria’s 1.4m
tonnes/year
• Need to find a new equilibrium to absorb new capacities
Copyright © 2015 Argus Media Ltd. All rights reserved.
Short-term oversupply shrinking seaborne trade
World urea trade - m tonnes
•
•
•
•
Traded market 48mn tonnes
2015-16
Traded market to shrink
2017 due to US
Supply to rise approx 3mn
tonnes from 2017
Oversupply worsens
2016
2017
Total
48
46-47
Middle East
18
19
China
13
13
FSU
8.5
8.5
Africa
6
7
SE Asia
1.6
2.6
W Europe
1.5
1.5
Caribbean
1.2
1.2
2
2
51.8
54.8
Others
Available
Copyright © 2016 Argus Media Ltd.
Phosphates
regional focus
new capacities starting
stable to soft outlook
Copyright © 2015 Argus Media Ltd. All rights reserved.
FMB
Phosphates resistance but downtrend continues
West: stable DAP/MAP market
East: weak/flat market
Recovery in L America through traders
NP/NPK strong line-up
US domestic trades at discounted
world prices
Switch to MES and regional focus
New capacities
NPK diversification
Africa Strategy
Brazil importing more this year but
not the same levels as 2013’s
Strong supply of 11-44 China limits
upside
China restricting output
Focus on regional markets
Supply side consolidation
New capacity plateauing
India expected to reach 5.5mn t DAP
imports
Demand insufficient to mop up Saudi,
Chinese and Australian DAP
Source: Argus FMB
Copyright © 2015 Argus Media Ltd. All rights reserved.
Phosphates prices holding but much lower levels
5 Year Range
DAP
PRICE
CYCLE
•
China is holding fob DAP levels by restricting
output
•
But Indian/Pakistan demand insufficient to mop
up Saudi, Chinese and Australian material
•
Indian buying continues but will be less than last
year at about 5.5mn t DAP imports
•
MAP price in Brazil is also limited by
fundamental oversupply especially from China
(11-44)
•
Overall outlook is for marginally weaker prices in
the east through rest of 3Q and into 4Q
•
Brazil will import more than last year but still less
than the high points of 2013 (which were around
3mn t)
2016 prices
DAP normalised
Sulphur normalised
DAP vs.
Sulphur
CHINA
Phase 1
Phase 2
Phase 3
Copyright © 2015 Argus Media Ltd. All rights reserved.
Phosphates: next 3-6 months
•
Brazilian prices will be steady basis lack of 11-52 available especially in trader
hands
•
More capacity already on line in Morocco (2nd plant of 4)
•
Prices will erode as seasonal demand dies down in India and Pakistan
•
Subsidy for DAP unlikely to rise in India hence any drastic increase in imports
unlikely
•
Ethiopian tender will boost exports for OCP and PhosAgro but no relief for DAP
Copyright © 2015 Argus Media Ltd. All rights reserved.
NPKs and Africa
Copyright © 2015 Argus Media Ltd. All rights reserved.
FMB
Global NPK trade
Russia
Norway/Finland
Largest exporting producer
Global footprint
Accounts for
around 28pc of
global exports
China
West Europe
Accounts for around 47pc of global
exports, most of which come from
Belgium, Norway and Finland
Southeast Asia
Latin America
Brazil :main gateway for
imports taking almost 500,000t
Almost 1.5mn t of imports
dominated by Russia and
Norway
Tax potential game changer
Africa
Current market in excess of
2 mn t
Russian Moroccan origin…
OCP Africa ambition
Copyright © 2016 Argus Media Ltd. All rights reserved.
Thailand accounts for around
45pc of this 2mn t market
Africa NPKs: consumption and supply selection…
OCP: 1 mn capacity dedicated to SSA
More capacities being rolled on
Mali
140kt
14-18-18+6S+1B
15-15-15
Cote D’Ivoire
80-100kt
15-15-15
15-15-15+B
Ethiopia
400kt
19-38-0+7S
Tenders
Nigeria
350kt
15-15-15
12-12-17+2MgO
Private/Restricted Tenders
Burkina Faso
100kt
14-18-18+6S+1B,
15-20-15+6S+1B
Ghana
280kt
20-10-0
23-10-5
15-15-15
0-22-18+MgO
Kenya
130kt
26-5-5
10 kg/ha
Note 1. This is a selection of NPK tenders in Africa.
Source: Argus FMB NPK weekly publication
Copyright © 2015 Argus Media Ltd. All rights reserved.
Demand in Africa Complex vs. Blend
NPKs Imports to sub-Saharan Africa
Source: Argus FMB Consulting, Argus FMB SSH Report
Copyright © 2015 Argus Media Ltd. All rights reserved.
•
Steam granulation,
compaction and blending as
routes to NPK, are usually
much more local in their
reach
•
and the battle for share will
be a key factor in the market
in the coming decades
Demand in Africa Complex vs. Blend
2016 NPKs 15-15-15Imports to sub-Saharan Africa
Complex cfr West Coast Africa
Blend cfr West Coast Africa
Morocco Fob
Source: Argus FMB
Copyright © 2015 Argus Media Ltd. All rights reserved.
Summary
Copyright © 2015 Argus Media Ltd. All rights reserved.
FMB
Where next
•
Market expects an upswing due to market fundamentals
◦ recovery of Brazil demand, increased competitiveness
◦ potential in Africa
•
But are we at the bottom of the cycle, ready to swing or
flat for sometime
◦ global malaise, commodity prices
◦ lower nutrient demand
◦ oversupply dynamic
•
Market shares/presence to play key role in this transition
•
Adoption of more indexation to secure positions
Copyright © 2015 Argus Media Ltd. All rights reserved.
Summary
•
Volatility to continue to be driven by Trade/Demand balance
•
Chinese exports to remain a key driver in the global fertilizer
pricing
•
An upswing is expected but the extra capacities will bring
market shares into play
•
Indexation as solution for volume/price risk management
•
NPKs as an option for diversification
illuminating the markets
Copyright © 2013 Argus Media Ltd. All rights
reserved.
NPKs Global Publication weekly trade and prices
•
•
•
•
•
•
•
•
Detailed table on African tenders (volumes, suppliers …)
Supply, demand and price updates
Summary of latest deals
NPK compound and blend price comparison
Russian weekly exports by grade, producer and destination
Monthly Ukrainian imports by grade, producer and origin
Key import/export market commentary
Related nutrients markets
Copyright © 2015 Argus Media Ltd. All rights reserved.
London
Houston
Washington
New York
Portland
Calgary
Santiago
Bogota
Rio de Janeiro
Singapore
Beijing
Tokyo
Sydney
Dubai
Moscow
Astana
Kiev
Porto
Johannesburg
Riga
Copyright © 2015 Argus Media Ltd. All rights reserved.