IFA: world fert demand to resume by early 2010

Paris-The International Fertilizer Industry Association (IFA) released its Fertilizer Outlook 2009-2013 report on June 30, suggesting that a rebound in demand is likely for 2009/10 after a sudden fall in demand during 2008/09, and a collapse in fertilizer sales and import demand through the fourth quarter of 2008. World fertilizer consumption is estimated down 5.1 percent, from 168.1 million mt of nutrients in 2007/08 to 159.6 mt in 2008/09. Nitrogen consumption fell 1.6 percent, the report said, while demand for phosphates and potash declined more sharply at 7 percent and 14 percent, respectively. “Because of a lack of confidence and limited access to credit, farmers in a number of countries either deferred their purchases of inputs, including fertilizers, or chose to reduce application rates,” IFA said. Although the beginning of 2009 was dim for the fertilizer industry, IFA said market conditions could be improving steadily for 2009/10 because of the stable growth trends that have been experienced so far in the agricultural sector, including “attractive commodity prices” that should encourage farmers to increase crop production. In its baseline scenario, IFA said the economic crisis can be translated in one to three years of lost growth in fertilizer demand, although a gradual rebound might be felt as early as in the next six months. IFA estimates growth of 3.6 percent in nutrient demand for 2009/10, along with a growth rate of 2.3 percent per annum in 2013/14. IFA also forecasts a potential fertilizer supply surplus for the years to come. Between 2000 and 2007, the world fertilizer industry increased its overall operating rates for nitrogen, phosphorus, and potassium, and by the end of 2007 was running at close to its maximum effective capacity. If such high demand had continued through the second half of 2008, IFA said, a shortage of potash, phosphate, and urea might have occurred. However, following the financial and economic crisis, a number of companies slashed their operating rates by temporarily closing down facilities. IFA added that in the short term, the depressed demand for fertilizer and, in the long run, new projects coming into production in several countries, are the main factors supporting the potential surplus argument, in particular in the potash and phosphate sectors.