Global Fertilizer Supply/Demand Five-Year Market Outlook ( )

Global Fertilizer Supply/Demand Five-Year Market Outlook (2012-2017) Magnus Berge 2º Congresso Brasileiro de Fertilizantes São Paulo, August 27, 2012

Presentation Outline Global Market Overview Supply, Demand, Trade and Prices Nitrogen Market Outlook Phosphates Market Outlook Potash Market Outlook Outlook for the Brazilian Market Conclusions CRU International 2

Global Market Overview 3

Fertilizer Demand >70% fertilizer consumption is in China, India, USA, EU and Brazil 20 15 10 5 0 USA N P K 20 15 10 5 0 EU N P K 20 15 India 50 40 30 20 10 China Brazil 6% ROW 28% EU 10% USA 12% China 28% India 16% 20 15 10 5 0 Brazil N P K 10 5 0 0 N P K N P K million mt nutrient 4

USA China Brazil India Demand Drivers SHORT TERM LONG TERM Crop prices Fertilizer prices Tactical buying Weather patterns Non-food crops Better nutrient balance Changing diets Rising population Soybeans Rice Corn 0 50 100 Indexed to USA Fertilizer is widely under-applied and inefficiently applied in developing economies poor yields and high growth potential 5

2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 2007 2008 2009 2010 2011 2012 Trends in N, P & K Demand 2007-2012 (million mt) 160 Urea 35 DAP 60 MOP 155 30 50 150 145 140 135 25 20 15 10 40 30 20 130 5 10 125 0 0 6

million mt million mt Supply & Demand Balances for Key Crops: Corn & Soybeans 950 900 850 800 750 700 650 CORN Production Consumption STU 20 18 16 14 12 10 8 STU in % SOYBEAN Production Consumption STU 300 30 280 28 260 26 240 24 220 22 200 20 180 18 160 16 140 14 120 12 100 10 STU in % 7

Jan 2006 = 100 Fertilizer Affordability Index 400 350 300 250 200 150 Index of Fertilizer Prices Index of Crop Prices 100 50 Correlation: 81% 8

CRU s Crop Price Index Forecast (2000=100) Export Price Index (2000=100) Wheat Corn Soybeans 360 310 260 Forecast 210 160 110 60 9

Supply, Demand, Trade and Prices Nitrogen Market Outlook Phosphates Market Outlook Potash Market Outlook 10

N Fertilizer Use by Main Regions - 2010 South Asia 24% E Asia 37% Americas 22% Europe + FSU 9% Other 4% SE Asia + Oceania 4% 11

N Fertilizer Use by Crop 2010 Other Crops; 16% Wheat; 17% Fruits & Veg.; 16% Rice; 16% Sugar Crops; 3% Cotton; 4% Other Oilseeds; 4% Oil Palm; 1% Other Coarse Grains; 5% Soybeans, 1% Corn, 17% 12

Million mt urea Urea Supply/Demand Balance, 2000-2017 300 250 Supply Demand Utilisation 100% 90% 80% 200 150 100 50 0 70% 60% 50% 40% 30% 20% 10% 0% 13

Urea Capacity Forecast to 2017 (million mt) Million mt 260 240 220 200 180 160 140 120 100 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 14

Urea Demand Forecast to 2017 (million mt) Million mt 190 180 170 160 150 140 130 120 110 100 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 15

Urea Trade Forecast to 2017 (million mt) Million mt 55 50 45 40 35 30 25 20 2010 2011 2012e 2013f 2014f 2015f 2016f 2017f 16

Crude Oil and Urea Prices, History and Forecast Brent Crude Oil, $/bbl Urea, Black Sea FOB price index (2000=100) Urea price index Oil price 500 450 400 350 300 250 200 150 100 50 0 120 100 80 60 40 20 0 17

2000=100 Urea Price Forecast Indices, Major Benchmarks 2000-2017 (2000=100) Black Sea Prill, FOB Middle East Granular, FOB NOLA Granular, FOB 600 500 400 300 200 100 0 18

Supply, Demand, Trade and Prices Nitrogen Market Outlook Phosphates Market Outlook Potash Market Outlook 19

Granulation capacity by major producer in 2011 ROW, 27% Other China, 25% OCP, 5% GCT, 2% Mosaic, 11% PCS, 2% CF, 2% Other USA, Vale, 3% 2% Ma'aden, 4% IFFCO, 4% PhosAgro, 3% Kailin, 3% YTH, 5% Wengu, 3% 20

Over 30% of annual production is traded 21

The short term forecast is dominated by India... 1. Dec 2011: Chinese export policy tightened 2. Q1/2 2012: Production difficulties continue 1 3. May 2012: OCP secures Phos Acid export contract at $885/mt CFR 4. May 2012: PhosChem DAP contract agreed at $580/mt CFR 5. June 2011: Chinese producers hold out and secure $580/mt contract 22

Brazilian crop area, million hectares Is anyone else able to pick the slack? Brazil! 60 50 40 30 20 10 0 1977 1982 1987 1992 1997 2002 2007 2012 2017 Sugar Soyabeans Corn 23

which will push result in Brazilian P demand growth of 5% CAGR 2011-2017 24

On the supply side, China has driven global production growth over the past decade 25

and exports are under pressure 30% 30%-135% 110% 110% 110% 110% 110% 110% DAP DAP MAP TSP SSP NPs NPKs DAP MAP TSP DAP MAP TSP DAP MAP DAP MAP DAP MAP DAP MAP DAP MAP TSP NPs 26

therefore limiting future production growth 27

Where is new supply going to come from? Eurochem Meleuzskie Vinachem OCP GCT JIFCO Xiangfeng Yidu Xingfa Pequiven Ferphos Ma aden IFFCO Paradeep Vale Copebras 28

The outlook for prices: bulls and bears Bearish factors: Short/medium term trends: Indian import are under threat (high prices, reduced subsidies, weak rupee); Anticipation of new supply ramping up in MENA (Ma aden, OCP); Anticipation of existing supply returning to production in 2012/13 (Tunisia, Egypt); Chinese trade policy could promote additional DAP/MAP supply, at lower prices. Long term trends: Further capacity growth expected in MENA over long term, could flood market. Bullish trends: Short/medium term trends: Agricultural markets remain relatively tight (corn, soybean); Willingness of producers to cut production (Mosaic, PhosAgro, OCP); Continued technical difficulties at Ma aden s operations; Continued strong P demand in Latin America over short term. Long term trends: Higher cost structures (opex & capex); Continued demand growth. 29

Price Index, 2010=100 FOB TAMPA DAP Price Index forecast: 2010-2017 (2010=100) 125 120 115 110 105 100 95 2010 2011 2012 2013 2014 2015 2016 2017 30

Supply, Demand, Trade and Prices Nitrogen Market Outlook Phosphates Market Outlook Potash Market Outlook 31

World Potassium Chloride Capacity 12 1 9 3 3 1 5 5 6 5 4 7 2 8 10 11 Other Intrepid Vale SQM Agrium QSL Potash Arab Potash K+S ICL Belaruskali Mosaic Uralkali PotashCorp 12 11 10 9 8 7 6 5 4 3 2 1 0 2 4 6 8 10 12 14 2011 Capacity (million mt/y) 32

New Potash Mines Under Construction K+S Legacy Project C$3.25bn 2.86m t/y Start-up 2015 Ramp-up to 2023 EUROCHEM Palaschersk Project US$2.0bn 2.00m t/y (Phase I) Phase II pending approval Start-up 2016 Ramp-up to 2019 VALE Rio Colorado Project US$5.9bn 4.35m t/y Start-up end-2014 Ramp-up to 2021 EUROCHEM Gremyachaya Project US$3.4bn 2.30m t/y (Phase I) 2.30m t/y (Phase II) Start-up end-2014 Ramp-up to 2017 33

million mt KCl Worldwide Capacity & Production Trend (million mt) 100 90 80 70 60 50 40 30 20 10 0 North America CIS ROW Global capacity 34

million mt Forecast of Global KCl Deliveries to 2017 70 60 50 40 30 20 10 0 55,1 52,6 ROW ROW SE Asia SE Asia India India Brazil Brazil 57,1 ROW SE Asia India 66,9 64,9 62,9 60,9 ROW ROW ROW ROW SE Asia SE Asia SE Asia SE Asia India India India India Brazil Brazil Brazil Brazil Brazil USA USA USA USA USA USA USA China China China China China China China 2011 2012 2013 2014 2015 2016 2017 35

KCl deliveries (million mt) Recent & Forecast KCl Deliveries Central & South America 14 12 Brazil Other 10 8 6 4 2 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 36

The short term forecast 1. India still making imports under 2011/12 fiscal year contract 2. 1 China has imported strongly in H1 2012. New contracts may not be signed until Q4 3. US has been hit by severe drought, potash imports affected but largest corn planted-area in decades to lead to spring demand rebound 4. Brazil has been importing at over 1m mt/month over the last two months but producers unable to raise prices 37

The outlook for prices: bulls and bears Bearish factors: Medium term trends: Bullish trends: Medium term trends: Risk of serious over-capacity developing over the next five years, despite recent news that BHP Billiton and Vale are postponing final approval for projects. Concerns that producers will continue to push to maximize prices, hampering demand growth. India remains a major concern, with consumption at least 30% below normal levels. Although some dilution of pricing power is expected but producers will continue manage production to protect prices There remains significant scope for demand growth in some markets: Brazil, India, China and SE Asia Crop prices are expect to remain high by historical standards, supporting potash prices 38

Vancouver/Portland netback (2010=100) KCl Annual Average Price Index Forecast to 2017 (2010=100) 140 135 130 125 120 115 110 105 100 95 2010 2011 2012 2013 2014 2015 2016 2017 39

Brazilian Market Outlook 40

Corn & soyabeans in tonnes per hectare Sugar Cane in tonnes per hectare Brazil Yield Development (Main Crops) 5,0 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 Soyabeans Corn Sugarcane 90 80 70 60 50 40 30 20 10 0 41

Million hectares Nutrient Demand in million mt Brazilian main Crop Area & P 2 O 5 K 2 0 Consumption (2012-2017) Corn Soyabeans Sugarcane P2O5 Demand K2O Demand 60 50 40 30 20 10 0 7 6 5 4 3 2 1 0 42

Conclusions Price projections corn, soybeans and wheat to stay well above first half of the 2000s on tighter stocks and everrising demand for food Urea trade to see steady growth over next five years rising to over 50 million mt by 2017 prices to stay above post 2008-crisis levels Phosphate China production to stabilise over next five years; Brazilian P 2 P 5 demand to support market; DAP pricing to rebound from 2013 Potash weakening supply/demand balance to put downward pressure on prices over the next five years 43

CRU International 44

CRU International MARKET OUTLOOK SERVICES Ammonia Urea Phosphate Rock Phosphoric Acid, DAP, MAP & TSP Potassium Chloride Sulphur Sulphuric Acid COST SERVICES Nitrogen Fertilizers Potassium Chloride Phosphate Rock Phosphate Fertilizers 45

CRU International FERTILIZER WEEK ONLINE Urea Nitrates & Sulphates Ammonia Phosphates Potash Sulphur Sulphuric Acid SHORT TERM FORECASTS Urea DAP/MAP Potash 46

CRU International CRU EVENTS Sulphur 2012 - October 2012 - Berlin, Germany Fertilizer Latino Americano - January 2013 - São Paulo, Brazil Nitrogen + Syngas 2013 - March 2013 - Berlin, Germany Phosphates 2013 - March 2013 - Monte Carlo, Monaco 47

Por sua atenção, obrigado! Magnus Berge Managing Editor - Fertilizer Week +44 (0)20 7903 2422 magnus.berge@crugroup.com Márcio Goto Regional Manager +55 11 5051 8124 +55 11 9972 64466 cell marcio.goto@crugroup.com www.crugroup.com