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Publication > Issue > Articles

Living with the overinvestment hangover

Summary

Investment in new urea capacity looks set to dwindle year-on-year up to 2020. We examine urea project prospects over the next five years – and also look further ahead beyond the current cyclical downturn.

Abstract

More than 25 new urea plants are expected to be commissioned over the next three years (Table 1). These additions mark the final phase of a massive expansion in global urea capacity that was kick-started by the ‘commodity supercycle’ of the early 2000s. For much of the preceding decade, high nitrogen prices together with the availability of cheap capital – and what analysts CRU describe as “a wide global cost arbitrage” – combined to create an almost perfect environment for urea plant investment. High prices cause big capacity boom From 2005 onwards, the Black Sea urea price benchmark doubled in real terms, compared to the long run average ($165-175/t), driven upwards by energy market conditions and a tightening supply/demand balance, as Alistair Wallace, senior consultant at analysts CRU, recently explained1. Keywords: Urea; Boom; Projects; Investment; Overinvestment; Supply; Oversupply; Capacity; Overcapacity; Outlook; Indian subsidy reform; Atlantic trade; Commodities; Supercycle; Coal; Gas; Anthracite; Price; Feedstock; China; India; Ira; United States; Mexico; Nigeria; CIS; FSU; Russia; CRU; Indorama; CF; OCI; Agrium; Koch; Matix; Pupuk; Petronas; Dangote; Manshi Energy; China Coal Erdos; Kima; Garabogaz

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EU fertilizer market continues to recover

Summary

After a period of decline, the European Union (EU) is emerging as a sizable, mature and relatively stable market for fertilizers. Europe's farmers currently apply 16-17 million tonnes of nutrients each year to around 130 million hectares of arable land. Encouragingly, rising application rates in the countries of Central and Eastern Europe should drive modest growth in the EU fertilizer market over the next 10 years.

Abstract

Nitrogen production, consumption and trade is a central and integral feature of the European fertilizers market. Nitrogen products – nitrates and urea in particular – account for two-thirds of total EU fertiliser use, with remaining consumption divided fairly evenly between phosphate and potash fertilizers. Nitrogen products also account for the majority of European fertilizer production and a sizeable segment of its fertilizer trade, although the continent also produces and exports potash in large volumes. Keywords: European Union; EU; EU-12; EU-15; UK; United Kingdom; France; Spain; Germany; Poland; Czech Republic; Bulgaria; Romania; Hungary; Central Europe; Western Europe; Eastern Europe; International Fertilizer Industry Association; IFA; Fertilizers Europe; Nitrogen; Phosphate; Potash; Ammonium nitrate; AN; Calcium ammonium nitrate; CAN; Urea ammonium nitrate; UAN; NPK; Single super phosphate; SSP; Triple super phosphate; TSP; Diammonium phosphate (DAP); Ameropa; EuroChem; Helm; Trammo; Keytrade; ICL; PhosAgro; Yara; OCP; GCT; Fertiberia; Demand; Consumption; Trade; Imports; Exports; Cereals; Oilseeds; Arable; Potato; Sugar beet; Pasture; CAP; Common Agricultural Policy

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Vietnam: a growing NPK producer

Summary

The end of drought in Vietnam means growth in domestic fertilizer consumption is expected to resume. The Japan Vietnam Fertilizer Co Ltd (JVF), one of the country's leading NPK producers, provides an illuminating update on the Vietnamese fertilizer market in a wide-ranging interview with David Hayes.

Abstract

Fertilizer use has grown substantially in Vietnam over the past decade driven by rising domestic fertilizer production and an increase in the total land area devoted to agricultural production. The Vietnamese government has also played an active role by encouraging farmers to raise their output to feed the growing population and boost export earnings. Keywords: Vietnam; China; Demand; Consumption; Production; Drought; Overcapacity; Imports; Rice; Maize; Coffee; Rubber; Urea; NPK; Ammonium sulphate; Ministry of Agriculture and Rural Development; Vietnam National Chemical Industries Corporation; Vinachem; Southern Fertilizer Corporation; Canto Fertilizer Corporation; Baconco; PetroVietnam Fertilizer and Chemicals Corporation; PVFCCo; Japan; Vietnam Fertilizer Co Ltd; JVF; Binh Dien Fertilizer Co

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Chloride in potash: its good and bad effects

Summary

Applications of MOP and other chloride-containing fertilizers need to be carefully managed for crops such as berries, stone fruits, nuts, tobacco and broad beans. Selection of chloride-free sources of potassium also offers distinct advantages for certain crops, especially those cultivated under saline growing conditions. Chloride, nonetheless, plays an important role in disease prevention, and is required in high quantities by sugar beet.

Abstract

Potassium chloride (KCl, muriate of potash, MOP) has a number of well-known natural advantages as a fertilizer and a source of K. It is widely available, relatively low-cost and readily soluble in water. Equally importantly, KCl has the highest potassium content of any of the mineral forms of potash. Potassium chloride delivers K to plant roots both quickly and effectively, and also mixes well with other nitrogen and phosphate fertilizers. Indeed, the evidence suggests that the use efficiency of N and P fertilizers improves when applications are combined with K1. Keywords: Chloride sensitivity; Chloride toxicity; Salinity; Irrigation; Salt index; Potash; Potassium chloride; Muriate of potash; MOP; Sulphate; SOP; SOPM; Polyhalite; Sirius Minerals; ICL; Polysulphate; POLY4; Cash crops; Cereals; Corn; Wheat; Citrus; Sugar beet; Avocado; Oil; palm; Coconut; Potato; Sweet potato; Tobacco; Pepper; Sugarcane; Berries; Stone fruits; Nuts; Beans

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Phosphate ore makes the grade

Summary

We examine the region-to-region variation in phosphate rock grade in key producing countries, including Morocco, China, the US and Russia, and assess the impact grade has on production costs and pricing.

Abstract

Global production of phosphate rock exceeded 196 million tonnes in 2014 and capacity is forecast to grow to nearly 233 million tonnes this year and 255 million tonnes by 2019 (Fertilizer International, 467 p49). China’s 80 million tonne production in 2014, equivalent to two-fifths of world output, exceeded the combined output of the next five top phosphate rock producing countries, Morocco, the USA, Russia, Jordan and Brazil (Figure 1). This makes China the dominant world producer, although less than 0.5% of its output is exported and traded internationally. Instead, almost all of China’s phosphate rock is consumed domestically within its borders to manufacture value-added phosphate products, particularly diammonium phosphate (DAP). Keywords: Phosphate rock; Phosphate concentrate; Phosphates; Production; Exports; Phosphoric acid; Quality; Grade; Low grade; High grade; BPL; Production costs; Depletion; Scarcity; USGS; Integer; CRU; China Chemicals Market; CCM; IFDC; Aleff Group; JDCPhosphate; JDC Phosphate; Morocco; Russia; Brazil; United States; US; Florida; Jordan; China; Finland; South Africa; Saudi Arabia; Senegal; Togo

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West Africa's vanguard phosphate ventures

Summary

More than thirty phosphate mining projects are currently under development in Sub-Saharan Africa. West Africa is already a major phosphate rock producer and it is in this region – in Senegal, Togo, Guinea-Bissau and the Republic of Congo – where the next crop of African phosphate projects looks likely to reach fruition.

Abstract

Morocco’s OCP is the dominant phosphate industry presence on the African continent and is continuing to invest and expand its activities on an impressive scale. The company expects to have added ten million tonnes of phosphate mining capacity and 1.8 million tonnes of fertilizer capacity by the end of this year, as it completes the first phase of its $16 billion 2008-2025 investment programme. The completion of these investments and the company’s achievements to date will be the subject of an OCP special feature in our May/June issue. Elsewhere in North Africa, recent developments at Misr Phosphate’s El Wady project in Egypt were a hot topic at February’s Arab Fertilizer Association (AFA) Forum in Cairo. But it is in Sub-Saharan Africa, particularly a cluster of relatively small states on West Africa’s Atlantic coast, where governments, investors and junior mining companies have been especially active over the last 12 months. Keywords: Sub-Saharan Africa; Africa; West Africa; Morocco; Uganda; Egypt; Senegal; Guinea-Bissau; Togo; Republic of Congo; ROC; Hinda; Cominco Resources; Misr Phosphate; OCP; Industries Chimiques du Senegal; ICS; Indorama; IFFCO; Baobab; Minemakers; Avenira; Mimran Natural Resources; Agrifos; JDC Phosphates; JDCPhosphates; Kpeme; Elenilto; Société Nouvelle des Phosphates du Togo; SNPT; Farim; GB Minerals; Nitron Group; CRU; Integer; Phosphate rock; Phosphates

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