GlGloobbaall F Feerrtitililizzeerr...
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www.ifdc.org by by Amit Roy Amit Roy IFDC IFDC Global Fertilizer Situation Global Fertilizer Situation and and Fertilizer Access Fertilizer Access Presented at the Building Sustainable Fertilizer Markets Session Agriculture and Rural Development Week 2009 The World Bank Washington, DC, U.S.A. March 3, 2009
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Transcript of GlGloobbaall F Feerrtitililizzeerr...
www.ifdc.org
by by
Amit Roy Amit Roy IFDC IFDC
Global Fertilizer Situation Global Fertilizer Situation and and
Fertilizer Access Fertilizer Access
Presented at the
Building Sustainable Fertilizer Markets Session
Agriculture and Rural Development Week 2009
The World Bank
Washington, DC, U.S.A.
March 3, 2009
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• Current Fertilizer Situation “Price Spike and Collapse”
• Trends in Fertilizer Production and Consumption • Industry Structure • Supply/Demand Balance for the Next 5 Years • SubSahara African Countries Options • Conclusions
Presentation Outline Presentation Outline
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Current Fertilizer Situation Current Fertilizer Situation “ “Price Spike and Collapse Price Spike and Collapse” ”
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Current Fertilizer Situation Current Fertilizer Situation “ “Price Spike and Collapse Price Spike and Collapse” ”
n n Tight supply/demand since 2006 Tight supply/demand since 2006 n n High commodity prices and High commodity prices and biofuel biofuel production production n n Depreciation of dollar vis Depreciation of dollar vis à à vis major currencies vis major currencies n n Nitrogen Nitrogen
• • Chinese export taxes up to 165% Chinese export taxes up to 165% • • High energy costs High energy costs
n n Phosphates Phosphates • • Decreased quality of phosphate rock Decreased quality of phosphate rock • • High cost of sulfur and ammonia High cost of sulfur and ammonia
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Current Fertilizer Situation Current Fertilizer Situation “ “Price Spike and Collapse Price Spike and Collapse” ”
n n Potash Potash • • Supply disruption from Russia due to Supply disruption from Russia due to ‘ ‘sink sink hole hole’ ’ and and ‘ ‘mine flooding mine flooding’ ’
• • Railway strike in Canada Railway strike in Canada n n Price collapse Price collapse
• • Drop in commodity and oil prices Drop in commodity and oil prices • • Financial crisis Financial crisis
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Trends in Fertilizer Trends in Fertilizer Production and Consumption Production and Consumption
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6.3%
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Industry Structure Industry Structure
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Industry Structure Industry Structure
2 million tons 2 million tons 1 million tons P 1 million tons P 2 2 O O 5 5 1 million tons NH 1 million tons NH 3 3 Capacity Capacity
US $2.8 billion*** US $2.8 billion*** US $1.5 billion US $1.5 billion US $1 billion+** US $1 billion+** Cost for Greenfield Cost for Greenfield Plant* Plant*
5 5– –7 years 7 years 3 3– –4 years 4 years 3 years 3 years Time for Greenfield Time for Greenfield Construction Construction
5.6% 5.6% 3.7% 3.7% 3.7% 3.7% Past 5 Past 5 Year Demand Year Demand Growth Growth
91% 91% 86% 86% 86% 86% Industry Operating Industry Operating Rate Rate
19% 19% 47% 47% 57% 57% % Government % Government Control Control
12 12 40 40 60 60 # of Producing # of Producing Countries Countries
Limited Limited Limited Limited Relatively abundant Relatively abundant Availability of Raw Availability of Raw Materials Materials
Potash Potash Phosphate Phosphate Nitrogen Nitrogen
* Cost of greenfield plants in North America ** Ammonia/urea complex *** Estimated costs exclude infrastructure outside plant gates Source: Fertecon, British Sulphur, Potash Corp and IFDC
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Fertilizer Production Fertilizer Production
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Supply/Demand Balance for Supply/Demand Balance for the Next 5 Years the Next 5 Years
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Sub Sub Sahara African Sahara African Countries Options Countries Options
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Per Hectare Fertilizer Use by Per Hectare Fertilizer Use by Markets, 2006/07 (kg/ha) Markets, 2006/07 (kg/ha)
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Fertilizer Price Formation: Fertilizer Price Formation: Thailand vs. Sub Thailand vs. Sub Saharan Africa (2006) Saharan Africa (2006)
X
X + 49%
X + 80%
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Significant Phosphate Deposits of Africa Significant Phosphate Deposits of Africa
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Significant Potential Nitrogen and Significant Potential Nitrogen and Potash Resources of Africa Potash Resources of Africa
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Sub Sub Sahara African Sahara African Countries Options Countries Options
n n Direct negotiations instead of tenders Direct negotiations instead of tenders • • Ethiopia vis Ethiopia vis à à vis Kenya (DAP import) vis Kenya (DAP import) • • India (DAP import from Russia) India (DAP import from Russia)
n n Pooled (regional) procurement Pooled (regional) procurement n n Direct purchase from companies with warehouse in Direct purchase from companies with warehouse in the region the region
n n Adopt improved nutrient use efficiency technologies Adopt improved nutrient use efficiency technologies n n Production for local and/or regional markets where Production for local and/or regional markets where economically viable economically viable • • Lake Kivu, central Africa Lake Kivu, central Africa • • Sukulu Sukulu Hills phosphates, Hills phosphates, Tororo Tororo, Uganda , Uganda • • Tilemsi Tilemsi phosphates, phosphates, Tilemsi Tilemsi, Mali , Mali
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Conclusions Conclusions
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Conclusions Conclusions
n n Total fertilizer nutrient demand increased by Total fertilizer nutrient demand increased by about 4.1% in 2008 outstripping supply. about 4.1% in 2008 outstripping supply.
n n Tight supply/demand, high energy prices and Tight supply/demand, high energy prices and other factors caused high fertilizer price other factors caused high fertilizer price spike that lasted about 12 months. spike that lasted about 12 months.
n n Investments in new capacities will be slow to Investments in new capacities will be slow to materialize under the current global financial materialize under the current global financial crisis. crisis.
n n Supply/demand balances will be fairly tight Supply/demand balances will be fairly tight through 2012. through 2012.
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Conclusions Conclusions (continued) (continued)
n n Total nutrient demand is expected to grow at Total nutrient demand is expected to grow at about 3.4% through 2012 mainly in Asia and about 3.4% through 2012 mainly in Asia and South America. South America.
n n High fertilizer prices will be offset by High fertilizer prices will be offset by increased government interventions in increased government interventions in developing countries and by pressure to developing countries and by pressure to increase nutrient use efficiency globally. increase nutrient use efficiency globally.
n n Sub Sub Sahara African countries should pursue Sahara African countries should pursue several options including direct negotiations several options including direct negotiations with suppliers to obtain better price for with suppliers to obtain better price for fertilizers and adopting improved nutrient fertilizers and adopting improved nutrient use efficiency technologies use efficiency technologies
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Conclusions Conclusions (continued) (continued)
n n On a priority basis sub On a priority basis sub Sahara African Sahara African countries should assess commercial viability countries should assess commercial viability for exploiting indigenous resources to for exploiting indigenous resources to produce fertilizers for local and regional produce fertilizers for local and regional markets. markets.
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