Global Nitrogen Fertilizer Demand and Supply: Trend, Current...

Global Nitrogen FertilizerDemand and Supply: Trend,Current Level and Outlook

Patrick Heffer and Michel Prud’hommeInternational Fertilizer Association

7th International Nitrogen Initiative Conference, 4-8 December 2016, Melbourne, Australia

GLOBAL NITROGEN FERTILIZER DEMAND

Evolution of Global Fertilizer Consumption by Nutrient(Tg N+P2O5+K2O)

0

20

40

60

80

100

120

140

160

180

200K2O P2O5 N

Source: IFA, 2016

Global demand: +33% since2000, to 182 Tg in 2013-8% in 2008/09 owing toeconomic downturn… but -2% only for NNutrient trend since 2000:o N: +35%, to 110 Tgo P2O5: +26%, to 41 Tgo K2O: +39%, to 31 Tg

Economicdownturn

Evolution of Regional N Fertilizer Consumption by Region (Tg N)

0

20

40

60

80

100

120Oceania

West Asia

Africa

E Europe & C Asia

Latin America

W & C Europe

North America

South Asia

East Asia

Source: IFA, 2016

Developing countries = 83% ofthe global increaseEast Asia (+13 Tg) & South Asia(+7 Tg) = 70% of the globalexpansionFastest growth in EECA (+84%)SSA expands quickly since 2008W&C Europe: Only contractingregion

Country Breakdown of Global N Fertilizer Consumption in 2013/14

31%

15%

11%3%3%

3%2%

2%

30%

China

India

United States

Brazil

Pakistan

Indonesia

Canada

France

ROW

Source: IFA, 2016

China (34 Tg)India (17 Tg)USA (12 Tg)Top-3 countries = 57% marketshareNext 5 markets (2-4 Tg each)= 13% shareTop-8 = 70% share

Breakdown by Product of Global N Fertilizer Demand in 2013/14

4% 3%

57%6

3%

5%

5%

8%

2% 0%7%

Ammonia dir. applic.

Ammonium sulphate

Urea

Ammonium nitrate

Calc.amm. nitrate

Nitrogen solutions

Other N straight

Ammonium phosphate (N)

Other NP (N)

N K compound (N)

N P K compound (N)

Source: IFA, 2016

N market dominated by ureao Fast increasing urea

market: +54% since 2000o Urea’s share rose from 49%

in 2000 to 57% in 2013Ammonium phosphates: 2nd

fastest growing N market:o +80% since 2000o 8% of current global N uses

Relative Contribution of the Main Crop Categories to Total N FertilizerConsumption in 2010/11 in the Main Fertilizer Markets

China

India

USA

EU-27

Brazil

WorldWheatRiceMaizeOther CerealsSoybeanOil PalmOther OilseedsFibre CropsSugar CropsRoots/TubersFruitsVegetablesOther Crops

Source: Heffer, 2013

Cereals = 55% of global Nfertilizer uses (58 Tg N)Rice, wheat, maize: 15-18% eachFruits & vegetables: 15%Oil crops: 7%Fibre crops, sugar crops, roots &tubers: 3-4% eachHuge country diversityo Maize: ~50% in the USAo Fuits & veg: >30% in China

Typical Evolution of N Use Efficiency (NUE) Over Time

Different countries are on different points on the curve

Sub-Saharan Africa

Brazil

DevelopedCountries

ChinaIndia

N Market Share in 2015/16Deved countries 26%China 29%India 14%Brazil 7%SSA 2%ROW 22%

NUE =N output

----------------------Sum of N inputs

Fertilizer-N+ Manure-N recycled+ Crop BNF+ Atmospheric deposition+ (irrigation, biosolids…)

Crop Yield

100%

Adapted from Zhang et al., 2015

Global NUE = 42-47% (Lassalettaet al., Zhang et al.)Largely influenced by crop mix,management practices, policyComplementary indicators needed

5-Year Outlook for World and Regional N Fertilizer Demand

Source: Heffer and Prud’homme, 2016

0 5 10 15 20 25 30 35 40 45

Oceania

West Asia

Africa

E. Eur. & C. Asia

W. & C. Europe

Lat. Am. & Carib.

North America

South Asia

East Asia

Av. 2013/14 to 2015/16Variation in 2020/21

Global N demand seen up 1.2%per year, to 117 Tg by 2020P and K demand grow faster(1.7% and 2.3% per year);reflects improving NUE andN:P:K balanceGrowth driven by 3 regions: 74%share of the anticipated growthNo growth in China half ofworld market is “mature”Africa, Latin America and EECAseen expanding faster

19%19%

Top-3 = 74%Top-3 = 74%19%19%

35%35%

Projections to 2030 for Global N Fertilizer Demand (Tg N)Under Three Different Economic Growth Scenarios

101115 124

3

83

6

0

20

40

60

80

100

120

140

2010 2020 2030

Fast, 6% per year

Base, 4% per year

Slow, 2% per year

Real

Source: Integer and LMC, 2013

Harvested area: +185 mill habetween 2010 and 2030(mostly grains and oilseeds)Projected increase in applicationrates, moderated by NUE gainsN demand: +1.3%/year, to 132Tg by 2030 (range 124-138 Tg)vs. +1.9% for P and +3.3% for KChina and India to play lessprominent roleCereals and fruits/veg drivedemand expansion

Crop-based projections

GLOBAL NITROGEN FERTILIZER SUPPLY

World Ammonia Capacity (Tg Ammonia-N)

-

20

40

60

80

100

120

140

160

180

200 OtherCoal ChinaCoal ROWNatural gas

Source: Prud’homme, 2016

Ammonia: the raw material for mostN fertilizersAccess to abundant, affordableenergy supply is criticalo Natural gas: 72% of the global

ammonia feedstock; bulk offuture growth

o Coal: 26% of the feedstockOutlook: Global capacity seen up 9%bw 2015 and 2020, to 189 Tg No in Africa, West Asia, North

America, EECAo mostly from natural gas

China Ammonia Production Capacity (Tg N)

-5

101520253035404550556065 Natural gas

Coal

Source: Prud’homme, 2016

Recent consolidation of theChinese N fertilizer industryChina currently accounts for95% of global coal-basedammonia capacityCoal-based ammonia ~82%of total Chinese ammoniacapacity in 2016Share of coal seen stablebetween 2016 and 2020

Global Energy Use Efficiency in Ammonia ProductionResults of the 2012 IFA Benchmarking Survey

Source: IFA, 2014

Fertilizer production uses ~1.2%of world’s total energyOf which ~90% is used forammoniaLarge gains in energy efficiency(adoption of advancedtechnologies)New plants performing close tomaximum efficiency

World Ammonia Production by Region (Tg N)

0

20

40

60

80

100

120

140 Oceania

East Asia

South Asia

West Asia

Africa

Latin America

North America

E. Europe & C. Asia

Central Europe

West Europe

Source: IFA, 2016

Heavy investments in newcapacity following 2007/08Global ammonia production:+29% bw 2003 and 2013, to 140Tg NStrongest growth in East Asia:+51%, +18 TgRapid expansion in West Asia:+120%, +7 Tg

World Urea Supply (Tg N)

0 2 4 6 8

10 12 14 16 18 20 22

2003

2005

2007

2009

2011

2013

Oceania East Asia South Asia West Asia Africa Latin America North America E. Europe & C. Asia Central Europe West Europe

0 2 4 6 8

10 12 14 16 18 20 22

2003

2005

2007

2009

2011

2013

Source: IFA, 2016

World urea production: +46% bw 2003and 2013, to 78 Tg N; Bulk of theincrease in East Asia and West AsiaGlobal urea trade: +55%, to 21 Tg N in2013Export growth largely captured byWest Asia; export growth also in EastAsia (China’s shift from net importer tonet exporter)South Asia accounts for most of theglobal import expansionOutlook: Global capacity seen up 10%bw 2015 and 2020, to 109 Tg N(mostly Africa, North America, EECA)

World Exports World Imports

Projected Evolution of Regional N Balances (Tg N)

-9

-6

-3

0

3

6

9

12

15

18

2014 2019

Thou

sand

s

EECA

West Asia

Africa

Central Europe

Latin America

East Asia

Oceania

North America

West Europe

South Asia

Source: FAO, 2016

Faster growth of industrial uses vs.fertilizer uses of ammonia and ureaPotential supply seen rising fasterthan demandWorld potential N surplus projectedto grow from 10 to 15 Tg N bw 2014and 2019Potential surpluses seen to furtherincrease in EECA, West Asia, AfricaPotential deficit forecast to furtherexpand in South AsiaPotential deficit in North Americawould sharply decline

IN SUMMARY

Key Take Home Messages

FERTILIZER SUPPLYFollowing 2007/08, heavy industry invest-ments in new ammonia and urea capacityto secure supply for the coming decadeInvestments in countries with abundantaccess to natural gas reserves, and inlarge fertilizer-consuming countriesSouth Asia, especially India, to remain themain importing marketEECA and West Asia to strengthen theirposition as leading net exporters

FERTILIZER DEMANDWorld N fertilizer demand projectedto steadily increase, at least until 2030N demand growth rate seen slowingdown vs. historical trend (reflectingNUE gains)Declining weight of Asia, andincreasing contribution of LatinAmerica and AfricaIndustrial N uses growing faster thanN fertilizer demand

SALES2014 value of sales

from fertilizer producers:US$172 bill

Of which sales valueof US$84 bill forstraight N fertilizers,US$25 bill forMAP/DAP and US$26bill for NPKs

EMPLOYMENT

926,000 jobs inproduction around the world

N sector directlyemploying 482,000 workers+ 31,000 for MAP/DAP and112,000 for NPKs

Fertilizer industryresponsible 2.3 mill jobsdirectly and indirectly

INVESTMENT

Industry to investUS$83 bill in revampsand expansions in 2015-2019

Anticipated investmentsof US$43 bill in straight Nfertilizer capacities, US$3bill in MAP/DAP andUS$2 bill in NPKs

Source: Integer Research for FA, 2016

The Global Fertilizer Industry at a GlanceMacro-Economic Indicators

Questions/comments:

pheffer@fertilizer.org