ECONOMIC CONTEXT AND AGRICULTURAL SITUATION

Transcription

1 IFA Short-Term Market Outlook Charlotte Hebebrand International Fertilizer Association FAI Annual Seminar, 3 November 2 December 216, New Delhi, India ECONOMIC CONTEXT AND AGRICULTURAL SITUATION 1

2 GLOBAL ECONOMIC GROWTH REMAINS SLUGGISH GDP Growth (%) 1 World Adv Eco Em/Dev Eco Source: IMF (October 216) Source: World Bank (November 216) FAVORABLE GROWING CONDITIONS (MOSTLY) 2

3 AMPLE SUPPLIES OF CEREALS A record 16/17 harvest Demand is rebounding as well Stocks remain comfortable PRICES OF MAJOR CROPS ARE DEPRESSED Prices have weakened again since June Barring any unforeseen event, prices will likely remain low in 216/17. Commercial farmers will continue to minimize expenses 3

4 FERTILIZERS ARE MORE AFFORDABLE THAN A YEAR AGO FERTILIZER DEMAND OUTLOOK

5 215/16: UNEVEN CONSUMPTION GROWTH 1,5 1, , 215/16 vs. 21/15: Volume Changes in Key Markets (kt nutrients) N P2O5 K2O Source: IFA Agriculture Brazil: Economic downturn (worst recession since 193s) Pakistan: Poor agricultural campaign; urea subsidy discontinued Argentina: Restrictive export policy Indonesia: El Niño impact China: Trend to slow growth; More balanced fertilization (linked to capping, K production) USA: Large maize area; Record harvest India: Excellent 215 Kharif season largely offset poor (dry) 215/16 Rabi season ROW: Hit by low crop prices, El Niño, economic slowdown World: Stable consumption; Drop for N; Increase for P and K 216/17: FIRM REBOUND, ESPECIALLY FOR N 1,2 1, /17 vs. 215/16: Volume Changes in Key Markets (kt nutrients) N P2O5 K2O Source: IFA Agriculture USA: Reduced cropped area; shift from maize to soybean EU: Tighter regulations (N in Germany) China: Demand growth further weakens Pakistan: Re-establishment of urea subsidy Brazil/Argentina/Russia: Low exchange rates; Improving policy and economic environment Indonesia/ROW: Rebound from previous season (El Niño end, sugar/veg oil/cotton price increase ) India: Rainfall close to average during Kharif 216; Good prospects for Rabi 216/17 World: Strong recovery (+2.1%), especially for N (+2.%) 5

6 1, /18: BACK TO AVERAGE GROWTH 217/18 vs. 216/17: Volume Changes in Key Markets (kt nutrients) 1,2 N P2O5 K2O Source: IFA Agriculture USA: No major change in crop mix and fertilization practices anticipated China: Stable/declining N and P demand; robust K demand growth Indonesia: Demand driven by oil palm and rice Brazil/Argentina: Improving economic and policy context India: Incentives for growing more food; Assuming no major change to fertilizer subsidies ROW: Market with largest potential (SSA, Ukraine ) World: Anticipated growth consistent with mediumterm outlook DEMAND SEEN ABOVE 19 MT IN 217/ Global Fertilizer Demand - Short-term Forecast (Mt nutrients) K2 P25 N Source: IFA Agriculture Change 215/16 216/17 217/18 N -.9% +2.% +1.3% P 2 O 5 +1.% +1.6% +1.5% K 2 O +.6% +1.8% +2.6% Total -.1% +2.1% +1.6% 6

7 SOUTH ASIA IS BIG; EECA AND AFRICA ARE FAST South Asia East Asia Lat. Am. & Carib. North America E. Eur. & C. Asia Africa Oceania West Asia 217/18 vs. 21/15: Anticipated Regional Fertilizer Demand Changes Volume Changes (Mt nutrients) Relative Changes (%) N P2O5 K2O Leading regions o N: S Asia, LatAm, EECA o P: S Asia o K: E Asia W. & C. Europe West Asia East Asia North America Lat. Am. & Carib. Oceania E. Eur. & C. Asia Africa Source: IFA Agriculture W. & C. Europe Source: IFA Agriculture South Asia -2% % 2% % 6% 8% 1% 12% INDIA VS. THE REST OF THE WORLD 18.1 Fertilizer Demand Changes between 21/15 and 217/18 (Mt nutrients) Mt in 3 years Source: IFA Agriculture 19.6 India = 9% of anticipated net increase in global demand (mostly N and P) o 56% for N demand o 68% for P demand China = 15% (mostly K) o 61% for K demand Brazil = 3% (6 th position only) SSA = 6% (increase similar to US, Russia, Indonesia) ROW: rest of the world; SSA: Sub-Saharan Africa 7

8 FERTILIZER SUPPLY CONTEXT Global Primary Nutrient Deliveries: Mt nutrients Trade Home deliveries Global deliveries 216 stable at 251 Mt Nutrients Home deliveries : 199 Mt : 8% share of sales +1% over 215 Exports: 52 Mt : 2% share of sales - 2% over 215 Source: IFA Production and International Trade 216 8

9 216 Context : Urea Mt urea Trade Urea India USA Europe Brazil Other Production + 2% but China -5% Drop in India -19%, and USA: -12% Exports: +2% but China -28% together removing 3 Mt Source: IFA Production and International Trade Context : DAP Mt DAP Trade DAP Major drop in India Soft in other markets Firm in LA MAP & NPS effects Global Production: -1% Gloabl Trade: -8% Source: IFA Production and International Trade 216 9

10 216 Context : MOP Mt MOP Trade Potash Global MOP Production -2.8% Stable exports Firm sales in most countries But effects from 215 carry-over in China Source: IFA Production and International Trade 216 Fertilizer Supply India Mt Products Urea Supply- India e 217 f Production Imports DAP Supply India e 217ee Production Imports 1

11 FERTILIZER SUPPLY OUTLOOK Global Urea Capacity Mt urea 215 to 217 Global urea capacity growing by 7%: Mt in 216, +11. Mt in 216; to reach 223 Mt by year-end % of the 215/17 net increase from: 28% USA : +.2 Mt 27% Nigeria: +. Mt China : -1.5 Mt Source: IFA Production and International Trade

12 Global Processed P Capacity Mt P 2 O to 217 P-fertilizers capacity growing by 9% +.5 Mt in Mt in Mt by year-end % of the 215/17 increase from: Morocco: 35% 215 Morocco Saudi Arabia China India Russia 217 Saudi Arabia: 31% China: 16% Source: IFA Production and International Trade 216 Global MOP Capacity Mt MOP to 217 MOP capacity rising by 9%: a net 7.8 Mt 91.6 Mt MOP by year-end 217 Canada: + 5. Mt Russia: +.9 Mt China: Mt Depletion removed 1.8 Mt MOP in 216 Source: IFA Production and International Trade

13 S/D Balances and Sales Prospects in 217 Nitrogen Mt N Capacity + % and Supply: +3% Demand: +2% Potential surplus growing P Acid Mt P2O5 Capacity +5% and Supply: +% Demand: +3% Moderate increase in potential surplus Potassium Mt K2O Capacity +5% and Supply: +% Demand: +2% Growing potential surplus Urea sales +2-3% to 183 Mt Imports stable at 9 Mt growing in SA and LA declining in USA and Pakistan Neutral to soft in rest of world DAP sales + 8%, to 39 Mt Imports : + 5%, to Mt Recovering into India Firm in LA and stable in Europe Lower imports in other Asia MOP sales +2-3%, to 6-65 Mt MOP Imports +2%, to 8-9 Mt Import demand firm in all regions Stable in Europe But risk of 216 carry-over Source: IFA Production and International Trade 216 Key Take Aways on Supply Challenge ahead: global Demand at 1.5-2% growth vs Supply at 3-% 1 new capacity projects : S/D balances stable on P, expanding on N and K 217 global nutrient sales expanding by 1.8%, to 253 Mt nutrients Global trade expands on P and K fertilizers, may stagnate on urea Energy prices recovering upward, from the lows of 216 (World Bank) Trade measures rising on trade defences actions Main uncertainties : Chinese economics ;Capacity slippage; Natural gas supply 13

14 KEY TAKE HOME MESSAGES: INDIA, WHAT ELSE? Economic context Global growth remains sluggish; strong activity in India, slowdown in China, improvement in Brazil and Russia Agricultural situation Ample supplies keep international prices low for cereals and oilseeds; slight improvement for sugar, veg oils, cotton and dairy Fertilizer demand No growth in 215/16; anticipated firm rebound in 216/17 and average growth in 217/18; India pulls global demand expansion Main uncertainties Political/policy evolution (trade/subsidies, environment/climate change, security) 1