K+S Asia Pacific Pte Ltd KALI Division Outlook for the ......- in China from currently 1.376 Mio to 1.434 Mio - in India from currently 1.190 Mio to 1.530 Mio • Per capita cultivated

© 2004 Capgemini - All rights reserved 1

K+S Asia Pacific Pte Ltd KALI Division

K+S Group

Outlook for the Asian K fertilizer market

IFA Crossroads Asia-Pacific, Bali 06.-08.11.2013 By Rolf Haerdter K+S Asia Pacific Pte Ltd, 1 Harbourfront Avenue, 16-05 Keppel Bay Tower, Singapore 098632

K+S Group

K+S Asia Pacific Pte Ltd

Outline of presentation

2

• Factors affecting the Asian Agriculture - global & regional economic development - increased crops demand for food and other uses • Mid- to long-term factors drivers of potash use - changing land-use/cropping patterns - crop management changes • Short-term drivers of potash use - weather conditions - commodity price development - growers’ income expectation • Summary


K+S Group


Factors affecting the Asian agriculture

3

• Strong GDP growth forecast for the next 5 years - SEA economies to expand by 5.4 % p.a. - China’s economy to expand by 8.3 % p.a. - India’s economy to expand by 6.4% p.a. • Population continues to grow within the next 20 years - in SEA from currently 593 Mio to 706 Mio - in China from currently 1.376 Mio to 1.434 Mio - in India from currently 1.190 Mio to 1.530 Mio • Per capita cultivated area further shrinks until 2050 - by about 32% in SEA from 0.19 in 2000 to 0.13 ha - by 10% in China from 0.10 in 2000 to 0.09 ha - by about 40% in India from 0.16 in 2000 to 0.09 ha

Sources: OECD, 2013, UN Pop. Division, 2010, GAEZ, 2009

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Cereal production in Asia: Coping with limited land

4

0.5

-0.2

1.3

0.3 0.3

1.9

0.5

-0.2

012345678

China

India

Indo

nesia

Ban

glad

esh

Vietnam

Tha

iland

Philip

pine

sUSA

Yie

ld (

t/h

a)

-1.0

0.0

1.02.0

3.0

4.0

5.0

Gro

wth

20

00

-10

(%

p.a

.)

Yield 2000 (t/ha) Yield 2010 (t/ha)

Prod. Growth (%p.a.) Yield growth (%p.a.)

Area growth (%p.a.)

Area (Mio ha): 90.1 100.1 17.4 12.1 8.6 13.5 6.8 57.5

Source: FAO, Statistics Division (FAOSTAT)


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Food supply in Asia: Lacking behind most countries

5 Source: FAO, Statistics Division (FAOSTAT)

World food supply (kcal/capita/day, 2009)

K+S Group


Protein and fat still under-supplied in Asia

6

Pro

tein

(g/c

apita/d

ay)

Fa

t (g

/capita/d

ay)

0

50

100

0

50

150

100

Source: FAO, Statistics Division (FAOSTAT), 2009


K+S Group


Per capita meat consumption increases

7 Source: IFPRI, Feeding the Future’s Changing Diets

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Per capita fruit and vegetable consumption

8 Source: IFPRI, Feeding the Future’s Changing Diets


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K+S Asia Pacific Pte Ltd Higher dietary requirements call for more potash

Source: Fertecon, 2011, IFA, 2009

31%

21%

14%

13%

8%

6%5% 2%

Other Crops

Fruits & Vegetables

Maize

Rice

Soyabean

Wheat

Oil palm

Cotton

Potash use by crop type

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Mid-longterm factors driving potash use in Asia

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• Diminishing land resources in Asia require higher intensity of fertilization, especially of K.

• Changing diets call for changing land-use/crops pattern towards increased planting of crops with higher K demand (maize, oil crops, fruits and vegetables).

• Oil palm, as the highest productive crop among oil crops, will further play a dominant role in the expansion and intensification of agriculture in SEA. It will dominate the world’s vegetable oil supply under diminishing land resources and protection needs of the existing rainforest areas.


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E-SEA: Potash use by crop type in % of total

0102030405060708090

Cereals Oil crops Others%

Source: Heffer, 2009

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Grain production and fertilizer use in China

100

238

382

512

100136 139

165

0

100

200

300

400

500

600

1980 1990 2000 2010

Grain production Fertilizer application%

Source: Zhang, WF., 2012


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0

10

20

30

40

50

1961 1969 1977 1985 1993 2001 2009

N（

Mil

lio

n t

on）

Crop uptake

N fertilizer input

Total N input

• N fertilizer input is equivalent to 1.7 times crop uptake • Total N input is equivalent to 2.4 times crop uptake

China: Nitrogen uptake out of balance with supply

Source: Zhang, FS. and Zhang WF. 2012

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Improved nutrient management increases NUE

Source: Pamplino, M.F. et al. (2013)

*

* NE = Nutrient Expert, fertilizer applied based on site specific nutrient management

Hybrid maize in China (2010-2012)


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Oil palm highest oil production per unit area

15

0

10

20

30

40

50

60

70

Soybean Sunflower Rapeseed Oil palm

Pro

d. (m

io t)

% o

f to

tal a

rea

0.0

1.0

2.0

3.0

4.0

5.0

Oil y

ield

(t/h

a)

Oil production (mio t) % of total area Oil yield (t/ha)

Source: based on Oil world, 2013

Oil production of various oil crops, 2013

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Growing use of palm oil as feedstock for biodiesel

Source: Oil World, 2013

29%

26%

24%

8%

7%6%

27%

20%

36%

6%

6% 5%

Soya oil Palm oil

Rape seed oil Used oil

Tallow Others

Feedstock for biodiesel 2013: (Total: 24.73 mio t)

Feedstock for biodiesel 2009: (Total: 16.18 mio t)


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17

0

2

4

6

8

10

12

14

16

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Oil p

alm

are

a (

Mio

ha

)

0

0.5

1

1.5

2

2.5

3

K-u

pta

ke

(M

io t)

Malaysia Indonesia K uptake MY K uptake ID

Oil palm expansion, a driving force for K use

Source: USDA, 2010, MPOB, 2010, IPNI

K+S Group


Oil palm: Best management for larger yields

18 Source: Oberthuer et al. 2013

% y

ield

in

cre

ase

*

*Fresh fruit bunch yield increase in Best management plots over reference plots


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Oil palm: BMP increases K application

0

500

1000

1500

2000

2500

3000

3500

Site 1 Site 3 Site 4 Site 5 Site 6

BMP REFkg K/ha/4y

*Total K application (organic plus inorganic) in BMP plots compared to REF plots over a period of 4 years

Source: Oberthuer et al. 2013

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Potash demand in Asia versus other regions

20

‘000 t K2O

Source: Fertecon, 2012


K+S Group


Potash import by Asia, selected countries

21

‘000 t K2O

Source: Fertecon, 2012

K+S Group


China: Potash import and consumption forecast

22 Source: Various

K2O (‘000 MT) 2013 2014 2015 2020 Data source

Consumption 5,458 5,476 5,494 CAU

Consumption 7,900 BOBAC

Import 3,700

Import 3,850 3,510 3,660 5,580 FERTECON

Consumption 6,550 6,850 7,250 9,000

Consumption 10,500 11,800 CISIA

Import 5,800 5,800

Consumption 5,700 CRU


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Short-term drivers of potash use

23

Weather conditions • China, droughts in N-China affected 2.09 Mio ha

and typhoons damaged 152 000 ha of crops will push for increased inputs in 2014 to warrant the supply of increased food demand.

• Temporary droughts in VN and Thailand as well as heavy floods delayed fertilizer consumption in 2013, which is expected to resume in 2014.

• India and the whole sub-continent experienced good monsoon rains this year, promoting yields and income of farmers.

• Indonesia's CPO production this year will most likely be lower than expected because of the wet weather in the last dry season disturbing pollination, reducing pressure on CPO stock levels and prices.

K+S Group


24

Price development agric. commodities 2000-13

0

50

100

150

200

250

300

350

400

450

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

Jan-

10

Jan-

11

Jan-

12

Jan-

13

Pri

ce

in

de

x (

%)

Wheat Maize Rice Palm oil Sugar

Source: World Bank

2000 = 100


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Potash sales to E/SE-Asia: 1st/2nd half 2008-2013

25

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

2008 2009 2010 2011 2012 2013

China 1st half China 2nd half India 1st half

India 2nd half SEA* 1st half SEA 2nd half

Source: IFA, 2013

1000 t

KC

l

*including Indonesia, Malaysia, Philippines, Thailand and Vietnam

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Summary

26

• Asia has to produce more and higher value crops to supply the growing populations’ with more protein, fat and bio resources on very limited land.

• In the mid- to long-term, potash use in Asia will be further increased, driven by both expansion and intensification of K-demanding crops/cropping systems.

• With few exceptions, generally favorable weather led to good harvests causing temporary pressures on crops prices, a trend likely to persist during 2014.

• With a good 1st half deliveries, K sales to Asia seized in the second half, triggered by trends in other nutrients and negative statements.

• K demand is likely to resume in 2014 after induced uncertainties are overcome, with a tendency of exceeding the usual growth rates due to under-supply in Q3-4.

Documents

K+S Asia Pacific Pte Ltd KALI Division Outlook for the ......- in China from currently 1.376 Mio to 1.434 Mio - in India from currently 1.190 Mio to 1.530 Mio • Per capita cultivated