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Fertilizer investment still has steam

Summary

Investors have historically viewed the fertilizer industry as a safe prospect due to its highly attractive long-term fundamentals. Although confidence has weakened during the commodities downturn, current investor sentiment towards the fertilizer majors has held up well, when compared to large, diversified mining companies.

Abstract

It was not only global crop prices which governed the fertilizer market last year. A host of other macroeconomic factors also held sway in 2015, according to merchant bank Hannam & Partners, most notably lower energy prices and the strength of the US dollar1. Although the outlook for 2016 remains mixed, the bank expects the global economy to edge up this year, with some market developments likely to stimulate fertilizer demand. Lower fertilizer and energy prices, in particular, when combined with currency depreciation, should maintain agricultural margins and boost fertilizer affordability. Although mining industry capital expenditure has contracted sharply since 2012, the fertilizer sector is continuing to make substantial investments in new capacity. Capital spending by the ten major fertilizer producers is expected to remain above $6 billion per annum over the next three years, according to Hannam & Partners. Comparatively sound sector finances, together with low capital costs, are helping prolong the fertilizer industry’s capital expenditure cycle. The capital structures of the major fertilizer producers – the balance of debt and equity needed to finance their operations and growth – are also generally healthy. Equity capital markets also seem to have bottomed-out, potentially making it easier for fertilizer producers to raise finance going forward. Keywords: Investment, Equity markets, Capital structure, Market capitalisation, Enterprise value, Debt, Earnings, EBITDA, Dividend yield, Capital expenditure, Fertilizer producers, Fertilizer majors, Mining companies, FTSE 350 mining index, Hannam & Partners, CF Industries, Agrium, Yara, PotashCorp, Mosaic, PhosAgro, Maaden, OCP, EuroChem, Uralkali, ICL, Incitec Pivot, BHP Billiton, Rio Tinto, Vale, Anglo American, Glencore

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Bigger, cleaner, more reliable

Summary

Worldwide trends in urea process technology, plant construction materials and product innovation are investigated.

Abstract

The last decade has been a highly active period for the design, engineering, procurement and construction of urea plants internationally. The award of new urea plant licenses annually, for example, has almost doubled since the global financial crisis of 2008, according to some estimates1. Urea production on an industrial scale has its origins in the first half of the 20th Century. Because it is a mature technology, plant operators typically have high expectations when it comes to modern urea process design. To meet those expectations, technology licensors generally need to devise a urea process concept able to combine: high feed material conversion, low energy consumption, low environmental footprint, low initial investment, high operating reliability and high product quality. Keywords: Nitrogen, Urea, Synthesis, Process, Products, Trends, Technology, Innovation, Nitrogen use efficiency, NUE, Neem, Sulphur, Saipem, Toyo, Stamicarbon, Sandvik, Agrium, Koch, Shell Thiogro, Shell Sulphur Solutions, Uhde, UFT, Lower elevation synthesis sections, Submerged condensation, CO2 stripping, NH3 Stripping, Thermal stripping, Mega plants, Agrotain, ESN, Smart Nitrogen, Super U, N-Tegration, Urea-ES, Rotoform, PoolCondenser, Vertical Submerged Carbamate Condenser, VSCC, ACES21, DP28W, Super duplex, Safurex, Omega Bond

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Growing tomato, pepper and cucumber under glass

Summary

We report on the fertilizer needs of tomato, pepper and cucumber crops. These are well-suited to greenhouse growing using drip irrigation systems. Fertigation, by integrating crop nutrition with water management, has the advantage of providing greenhouse crops with exactly the right types and amounts of nutrients at each stage of plant development.

Abstract

Drip irrigation is widely used as a watering system for cultivating greenhouse crops such as tomato, pepper and cucumber. It provides growers with a number of distinct advantages: l Drip irrigation is able to control crop growth by regulating the supply of both water and nutrients l It reduces greenhouse relative humidity as not all of the soil is irrigated l Humidity is further reduced if drip irrigation is combined with the use of a white, light-reflecting polyethylene film as a mulch l In countries without a good water supply, drip irrigation ensures that water and energy are used efficiently, leading to major water and cost savings Proper water management is essential for high yielding, high quality tomato, pepper and cucumber. The water requirement of outdoor grown tomatoes, for example, varies between 4,000-6,000 m³/ha, rising to 10,000 m3/ha for greenhouse growing. Watering also needs to be increased by 20-30% on light soils or when saline water is used. Consequently, a drip irrigation system equipped for fertigation is usually advisable, especially as 70% of tomato root systems are in the upper 20 cm of the soil. In tomato crops grown for processing, it is common practice to cease irrigation 2-4 weeks prior to harvest to increase the dry matter content of fruit and reduce soil compaction during harvest1. Keywords: Greenhouse crops, Tomato, Pepper, Cucumber, Yield, Quality, Fertigation, Drip irrigation, Nutrients, Micronutrients, Nutrient deficiency, Nutrient requirements, Nutrient removal, Fertilizer recommendations, Balanced applications, Nitrogen, Nitrates, Potassium, Potash, Phosphorus, Phosphate, Magnesium, Calcium, Boron, Zinc, DAP, MAP, MKP, MOP, SOP, Superphosphate, Ammonium nitrate, Potassium nitrate, Potassium chloride, Potassium sulphate, Calcium nitrate, Magnesium sulphate, Haifa, ICL, Yara, Tessenderlo, SQM, SoluPotasse, Multi-K, Magnisal, Multicote, YaraVita, YaraLiva, YaraMila, NovaNPK, NovaMAP, NutriVant

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A demanding business

Summary

A sophisticated new approach to forecasting and understanding the main drivers of fertilizer demand is explained by Oliver Hatfield of Integer Research. This has revealed some unexpected and surprising underlying drivers of demand for primary nutrients. Predicting future demand also looks like it will become an increasingly complex task in the future.

Abstract

The demand fundamentals of the fertilizer industry are robust, and demand for the primary nutrients has grown fairly steadily for decades. Demand also tends to be more stable than supply. The industry is cyclical but in general the main contribution to the ups and downs emanates from the supply side, tracking periods of over and under-investment which are very typical of commodity markets where adding new capacity takes years. It often feels like demand is having a strong market influence, but this is frequently exaggerated by the effect of stock build and withdrawal, a component of which will be speculators looking to gain from rising or falling prices. How to confidently predict demand Figuring out what drives fertilizer demand is not as simple as it seems. Over the last few years, Integer has developed a unique body of research to better understand demand fundamentals. The traditional approach was simple statistical extrapolation, looking back at historic trends and assuming they will more or less continue. This is probably good enough in the short-term, but has significant limitations over the medium- to long-term, when compounding will significantly amplify any errors. Keywords: Integer Research, Demand, Fertilizer demand, Demand forecasts, Demand drivers, Phosphate demand, Potash demand, Nitrogen demand, Crop yield, Primary nutrients, US, Brazil, China, Asia, Latin America, EU, Corn, Soy, Soybean, Nitrogen use efficiency, NUE, 4Rs, Nutrient stewardship

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Pierre Becker Memorial Award 2016

Summary

Paul Smith received the 2016 Pierre Becker Memorial Award on 23 June. His career was celebrated by friends and colleagues in a presentation ceremony at the International Fertiliser Society's Annual Technical Conference in Budapest.

Abstract

“In recognition of your outstanding contribution to the understanding, exploitation and application of phosphate resources, the directors and staff of Fertilizer International magazine honour Paul Smith. Your long standing commitment to the practical application of phosphoric acid technology globally has justly earned you the lasting admiration of many colleagues and friends in the fertilizer world.” This is the citation on the 2016 Pierre Becker Memorial Award presented to Paul Smith in Budapest in June by Simon Inglethorpe, editor of Fertilizer International. Paul is a highly deserving recipient of this much-valued, long-established award. Over a long and distinguished career, Paul has been an influential figure in the huge expansion of the phosphates industry that has taken place in the last 40 years. Keywords: Pierre Becker, Award, 2016, Hungary, Budapest, International Fertilizer Society, IFS, Paul Smith, Fertilizer International, BCInsight, Luc Maene, Prayon

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Innovators feeding a growing market

Summary

Belgium's EcoPhos is a growing force in the European feed phosphates market with production sites spread across three EU member states. We profile the company and its innovative production technology as it opens a centre of excellence in Bulgaria and gears up to enter the fast-growing Asian feed phosphate market.

Abstract

Innovative phosphates producer EcoPhos S.A. was founded in 1996 by Mohammed Takhim. During the last 20 years, from fairly modest beginnings, this relatively young Belgium-based company has grown into a e150 million turnover business employing over 250 people. Impressively, EcoPhos now has two production plants in operation (Table 1) and two under construction, ambitiously, a further five plants are at the design/construction phase currently. What is unique about these plants – which range from 60,000 to 660,000 t/a capacity – is their ability to consume low-grade sources of phosphate using exclusive, proprietary technology developed by EcoPhos. Three brands, two business models The company owns three distinct corporate entities: EcoPhos is the company’s technology and project services arm, Aliphos is an animal feed phosphate producer and TechnoPhos, a relatively new venture, is a technology demonstration centre for the company’s customers. The firm is truly European with sites spread across three EU member states. Keywords: EcoPhos, Aliphos, Technophos, GNFC, EuroChem, Temco, Evergrow, Innovation, Phosphate, Low grade, Sewage sludge, Ash, Production, Process, Feed phosphates, Animal feed, Dicalcium phosphate, DCP, Super rock, Gypsum, Belgium, Netherlands, Bulgaria, Egypt, Kazakhstan, France, Peru, Syria, Namibia

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40th Annual Clearwater Convention

Summary

This year's 40th AIChE Annual Clearwater Convention was held at its usual venue, the Sheraton Sand Key Resort, on Florida's Gulf coast on 10-11 June.

Abstract

For four decades now, industry engineers have gathered at Florida’s idyllic Clearwater Beach for the AIChE’s two-day annual convention on sulphuric acid and phosphoric acid technology. The convention, which runs on a Friday and Saturday, is renowned for its relaxed atmosphere and ability to combine business with friendship, food and family. An impressive 370 international and US delegates attended the 2016 convention. Rick Davis of Davis & Associates and Crystal Alonso of The Mosaic Company opened proceedings by chairing the long-standing sulphuric acid workshop on Friday afternoon. The theme of this year’s workshop was advances in process control. This workshop aimed to cover the collection and interpretation of process data and the very latest in analyser technology. Keywords: AIChe, Clearwater Convention, Florida, Phosphoric acid, Sulphuric acid workshop, Outotec, MECS, Breen Energy Solutions, SensoTech, Flexim, Ion247, JDCPhosphate, Nalco, Jacobs, Corrosion Engineering, PegasusTSI, Ekato Fluid Sales

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Potash growth shifts east

Summary

Large-scale additions to potash supply in Canada, Russia and Belarus between now and 2020 will create massive regional surpluses in North America and the Former Soviet Union. Much of this extra potash supply will be exported to meet growing demand in East Asia, Latin America and South Asia. The East Asian region, and China in particular, is facing a growing supply deficit and is likely to remain the world's largest potash import market over the medium-term.

Abstract

Recently released potash industry figures and forecasts suggest a surprising switch around in regional trends. Particularly interesting was the contrast between where growth in world potash capacity has largely come from in the last four years – principally North America – compared to where it will mainly come from between now and 2020 (Figure 1). Regionally, it will be expansions in the Former Soviet Union (FSU) which are likely to drive global potash capacity growth in the medium-term, as investment in a raft of large-scale greenfield and brownfield projects comes to fruition. Although North America will remain the dominant regional producer of potash, the capacity gap with the FSU is set to shrink fast, falling from 5.5 million tonnes currently to just 2.0 million tonnes K2O by 2020. At the same time, the FSU’s share of global potash capacity is forecast to rise to a third over the next five years. Collectively, North America’s potash producers can take some comfort from the fact that expected growth in FSU production capacity will not be quite enough to eclipse their current world-leading status. Keywords: Potash, Trade, Supply, Capacity, Supply demand balance, Surplus, Deficit, Imports, Exports, MOP, SOP, SOPM, North America, Former Soviet Union, FSU, East Asia, Latin America, East Europe & Central Asia, Canada, Belarus, Russia, Uzbekistan, Turkmenistan, China, IFA International Fertilizer Association, PotashCorp, Belaruskali, Uralkali, Mosaic, EuroChem, Agrium, K+S, UzKimyoSanoat, Qinghai Salt Lake Co, Luobupo, Garlyk, Legacy, Vanscoy, Esterhazy, Rocanville, Solikamsk, Petrikov, Usolskiy, VolgaKaliy

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