Drivers in global fertilizer markets

Drivers in Global Fertilizer Markets
Charlotte Hebebrand
Director General, IFA
2024 prospects for EU agricultural markets
Brussels, 5 December 2014
• Fertilizers at a glance
• Overview of IFA
• Yield developments & grain quality
• Fertilizer Consumption
• Link to feedstocks
Drivers in Global Fertilizer Markets
… To feed the world,
one must first feed
the crops…
NORMAN BORLAUG
… a few billion people
would have to die if we
hadn't come up with
fertilizer…
BILL GATES
Fertilizers represent an essential ingredient
in the drive towards world food security
… Fertilizers: world’s most
important humanitarian
product”…
IFA is a global association which:

Improves the operating environment along
the fertilizer supply chain

Encourages expertise-sharing among
members

Promotes efficient and responsible
production and application of fertilizer
products


Develops and disseminates statistics
Informs and contributes to public policymaking at an international level
Fertilizer use, cereal production
and food security
Drivers in Global Fertilizer Markets
| Source: FAO and IFA
Wheat response (yield and protein content)
to N fertilizer applications
Drivers in Global Fertilizer Markets
| Source: Grant and Bruulsema
World fertilizer consumption
Million tonnes nutrients
180
160
140
120
100
80
60
40
20
0
TRANSITION ECONOMIES
Drivers in Global Fertilizer Markets
DEVELOPED
DEVELOPING
1961 to 2012
| Source: IFA
Fertilizer consumption
in Western and Central Europe
Million tonnes nutrients
35
42% Share in world consumption
30
25
20
15
10
5
K2O
P2O5
9%
N
0
Drivers in Global Fertilizer Markets
1961 to 2012
| Source: IFA
Evolution of cereals + rapeseed production
relative to fertilizer-N deliveries in France
(100 = 1990)
140
130
120
110
100
90
80
70
60
50
100 = 1990
Cereals production + rapeseed (est. 09/13)
Fertilizer-N deliveries
Development of
agricultural production
Drivers in Global Fertilizer Markets
Integrated fertilization
| Source: SSP and UNIFA
Consumption by product
in Western and Central Europe
33%
82%
60%
43%
Drivers in Global Fertilizer Markets
| Source: IFADATA
Fertilizer production and trade
in Western and Central Europe
PRODUCTION
EXPORTS
IMPORTS
Million tonnes nutrients
Million tonnes nutrients
Million tonnes nutrients
18
16
14
12
10
8
6
4
2
0
18
16
14
12
10
8
6
4
2
0
35
30
K2O
P2O5
N
25
20
15
10
5
0
1961 to 2012
Drivers in Global Fertilizer Markets
1961 to 2012
1961 to 2012
| Source: IFA
Million tonnes ammonia
Ammonia capacity related to feedstock
WORLD
EUROPE
300
25
250
200
Coal - China
Coal- rest of world
Natural gas
Other
Other
Natural gas
20
15
150
10
100
50
5
-
0
2000 2003 2006 2009 2012 2015 2018
2/3 of global ammonia
capacity is based on
natural gas feedstock
2000 2003 2006 2009 2012 2015 2018
30% of global ammonia
capacity is based on
coal, of which 95% is
located in China
Drivers in Global Fertilizer Markets
In Europe, natural gas
is the main feedstock,
accounting for 92% of
ammonia capacity
| Source: IFA Production and International Trade, 2014
Urea cash costs
Influence of natural gas prices
US$/tonne
450
400
350
other
natural gas cost
300
 The cost of natural gas
accounts for 87-95% of the
cash cost of ammonia
production;
250
200
150
 and between 78% and 91%
of the cast costs of urea
production.
100
50
0
 Ammonia and urea cash
costs are closely correlated to
feedstock prices.
5
6
7
8
9 10 11 12 13 14 15
US$/MMBtu
Drivers in Global Fertilizer Markets
| Source: http://www.yara.com/tools/cashcost.htm
Natural gas
Regional wholesales prices 2013
US$/MMBtu
16
14
12
10
8
6
4
2
0
NE Asia Europe
Asia
EECA
South America
Asia
WA
Africa
Comparative wholesales prices of natural gas show
significant disparities between regions.
Drivers in Global Fertilizer Markets
| Source: IGU, 2014
Urea cash costs vs natural gas prices
Trend 2014 to 2015e
US$/tonne
500
2014
2015
400
300
200
100
0
US
Russia
Drivers in Global Fertilizer Markets
China
WE_
Zeebrugge
Ukraine
West Asia
Africa
| Source: US EIA, Azotecon, CICCC, Argus, Yara cost model
Nitrogen supply/demand balances
Europe 2011 - 2018
Million tonnes nitrogen
20
Supply
Demand
16
12
8
4
2011
2012
2013
Drivers in Global Fertilizer Markets
2014
2015
2016
2017
2018
| Source: IFA Production and International Trade, 2014
Million tonnes products
Nitrogen fertilizer imports into Europe: 2013
7
6
5
4
3
2
1
0
AN
CAN
Urea
Europe
Belarus
NITROGEN FERTILIZER IMPORTS
Russia
Ukraine
West Asia
Americas
Africa
Other
UREA IMPORTS
Europe
Africa
EECA
West Asia
44%
27%
22%
7%
Drivers in Global Fertilizer Markets
| Source: IFA Production and International Trade, 2014
Regional urea capacity developments
2013 - 2018
Million tonnes urea
30
25
20
15
10
West Asia
Africa
USA
Russia
Europe
5
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Drivers in Global Fertilizer Markets
| Source: IFA Production and International Trade, 2014
For more information…
www.fertilizer.org
USA: Natural gas industrial prices
US$/MMBtu
14
12
10
8
6
4
2
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source : US Energy Information Agency
Europe: Natural gas supplies 2012
Qatar
6%
Other
4%
Indigeneous
production
34%
Algeria
9%
Total
5060 TWh
Norway
23%
Russia
24%
http://www.eurogas.org/uploads/media/Eurogas_Statistical_Report_2013.pdf

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