Fertilizer Trends: A large product variety · PDF fileBeijing Tokyo Sydney Dubai Moscow Astana...
Transcript of Fertilizer Trends: A large product variety · PDF fileBeijing Tokyo Sydney Dubai Moscow Astana...
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Fertilizer Trends: A large product variety
Mounir Halim
GPCA, Dubai7th Sep 2016
• 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
Overview
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FMB
Argus FMBDedicated global expertsLarge portfolioPrice assessments used globally
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Argus FMB Wide Coverage and widely used
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RESOURCES INTERMEDIATES
POTASH
Gas
Ammonia
Integrated Urea Producers
N-Fertilisers
DAP/MAP/TSPMGA
NPK
Sulphur
Rock
Blenders / Distributors
AGRI Supply
RETAIL
COOPSAGRI-INPUTS
RETAIL NETWORK
SINGLE COMPOUNDS
Financial institutions / NGOs / Governments…
MIXED COMPOUNDS
New weekly report
• Weekly publications: prices and market intelligence• Monthly publications: forecast and market trends• Annuals : long term strategic forecast
Indexation price assessments in contracts
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Argus Brazil cfrUrea, MAP indexMOP NegoUS, Russian, Moroccan, and Saudi Origins
Argus Nola fobN and P Index
Argus AG fobUrea, DAP indexGlobal trade
Argus Algeria, Egypt fobUrea indexEuropean Market*
Argus fob MoroccoPhosphatesN&L America, Asia
Argus Baltic fobUrea indexGlobal trade
Argus fob YuzhnyUrea indexGlobal trade
Argus fob TampaDAP index
FMB
U R E A lower fluctuations, lack of visibility and increased riskFloor price and VolatilityCapacity and Forecast
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Ammonia Cost Curve flat-lining in the short-term
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Source: Argus FMB Ammonia Cost & Margin Service
Notes: Tonnage refers to merchant ammonia supply potential
Nitrogen Over supply a dominant theme in 2016 overshadowing nutrient demand
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Plants returning from turnaround increasing availability
More than 13mn t exports in 2015. 30% less in 2016
Capacity to export but setting a floor price
Healthy demand – market rebound
new capacities
Increasing product availability
Urea prices bottomed out after India Tender at $180
AG 2016 average price, $201, 80$/t (28pc) lower than in 2015
• 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
Urea prices
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reserved
Lowest since 2004
Supply/Demand fluctuations driven by price range $180-200
Nitrogen price 10+ year low
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• 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
China
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Jan-Jul 2014 2015 2016
Global 5.283 7.749 5.778
India 1.592 3.03 1.617
MS in India 30% 39% 28%
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
Gas
Coalprojects
Crops Curtail
Economycurrency
Fertilizer Floor Price Dynamics
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FLOOR PRICE
floor
floor
floor
floor
2015- 2016Low to date
floor Tightening of spread
FACTORS INFLUENCING FERTILIZER FLOOR PRICE
Urea Price Volatility tightening
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Urea Middle East: Jan – Aug 2015
Standard Deviation: 0.0272
$/t fob
Source: Argus FMB
$
Urea price, right axis
Week to week price delta, left axis
Urea Price Volatility tightening
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Urea Middle East: Jan - Aug 2016
Standard Deviation: 0.0250
$/t fob
Source: Argus FMB
$
Urea price, right axis
Week to week price delta, left axis
• 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
New capacities
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• Traded market 48mn tonnes2015-16
• Traded market to shrink 2017 due to US
• Supply to rise approx 3mn tonnes from 2017
• Oversupply worsens
Short-term oversupply shrinking seaborne trade
World urea trade - m tonnes
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
Others 2 2
Available 51.8 54.8
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FMB
Phosphatesregional focus new capacities startingstable to soft outlook
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Phosphates resistance but downtrend continues
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Recovery in L America through traders
NP/NPK strong line-up
Brazil importing more this year but not the same levels as 2013’s
Strong supply of 11-44 China limits upside
Source: Argus FMB
China restricting output
Focus on regional markets
Supply side consolidation
New capacity plateauing
US domestic trades at discounted world prices
Switch to MES and regional focus
New capacities
NPK diversification
Africa Strategy
East: weak/flat marketWest: stable DAP/MAP market
India expected to reach 5.5mn t DAP imports
Demand insufficient to mop up Saudi, Chinese and Australian DAP
Phosphates prices holding but much lower levels
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• 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)Phase 1 Phase 2 Phase 3
DAPPRICE CYCLE
DAP vs.SulphurCHINA
5 Year Range
2016 prices
DAP normalisedSulphur normalised
• 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
Phosphates: next 3-6 months
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FMB
NPKs and Africa
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Global NPK trade
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Latin AmericaBrazil :main gateway for imports taking almost 500,000t
AfricaCurrent market in excess of 2 mn tRussian Moroccan origin…OCP Africa ambition
RussiaAccounts for around 28pc of global exports
ChinaAlmost 1.5mn t of imports dominated by Russia and NorwayTax potential game changer
Southeast AsiaThailand accounts for around 45pc of this 2mn t market
West EuropeAccounts for around 47pc of global exports, most of which come from Belgium, Norway and Finland
Norway/FinlandLargest exporting producer
Global footprint
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Ethiopia
400kt
19-38-0+7S
Tenders
Nigeria
350kt
15-15-15
12-12-17+2MgO
Private/Restricted Tenders
Mali
140kt
14-18-18+6S+1B
15-15-15
Burkina Faso
100kt
14-18-18+6S+1B,
15-20-15+6S+1B
Cote D’Ivoire
80-100kt
15-15-15
15-15-15+B
Ghana
280kt
20-10-0
23-10-5
15-15-15
0-22-18+MgO
Kenya
130kt
26-5-5
Africa NPKs: consumption and supply selection…
OCP: 1 mn capacity dedicated to SSA
More capacities being rolled on
10 kg/ha
Note 1. This is a selection of NPK tenders in Africa. Source: Argus FMB NPK weekly publication
Demand in Africa Complex vs. Blend
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• 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
Source: Argus FMB Consulting, Argus FMB SSH Report
NPKs Imports to sub-Saharan Africa
Demand in Africa Complex vs. Blend
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Source: Argus FMB
2016 NPKs 15-15-15Imports to sub-Saharan Africa
Complex cfr West Coast AfricaBlend cfr West Coast AfricaMorocco Fob
FMB
Summary
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• 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
Where next
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illuminating the markets
• 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
Summary
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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
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