The International Fertilizer Industry Association (IFA) sees better consumption ahead in its new Short-Term Fertilizer Outlook 2009-2010. Tentative forecasts for global fertilizer consumption in 2009/10 point to a small rebound of 1 percent, to 158 million mt. IFA says projections indicate a full recovery for nitrogen (+1.6 percent), a small rebound for phosphate (+3 percent), and a further decline for potash (-4.5 percent). Total fertilizer demand is anticipated to continue its rise in South Asia, and to rebound in North America and West Asia. Providing the recovery of world economic activity and positive changes in agricultural market fundamentals materialize, global fertilizer demand in 2010-11 could come back to positive growth rates (+4.9 percent). Demand for potash would strongly rebound (+13.5 percent), while demand for N and P would continue its recovery (+2.6 and +6.2 percent, respectively).
Aggregate consumption in 2008-09 is assessed as down 6.7 percent, to 156.4 million mt nutrients (for the 3 main nutrients NPK). Consumption is estimated to have contracted much more sharply for P and K fertilizers (-10.5 and -19.8 percent, respectively) than for N (-1.5 percent). The largest changes in volumes occurred in South Asia (+2.1 million mt) on the positive side, and in Western and Central Europe (-4.3 million mt), North America (-3.4 million mt), East Asia (-3 million mt), and Latin America (-2.4 million mt) on the negative side.
Despite application rates well below crop requirements, farmers in the U.S. are expected to harvest a bumper corn crop this year, and farmers in France have enjoyed record wheat yields. However, by doing so, IFA warns they are mining their soil nutrient reserves, which is not sustainable in the long-term. It said the return to sustainable fertilization practices will probably be triggered by more stable and predictable crop prices.
This year global nutrient production and sales dropped to very low levels due to the important inventory carry-overs in the worldwide distribution systems. For the second consecutive year, total world nutrient production in 2009 appeared to exceed sales and consumption, translating into a significant build-up of inventories at producers’ ends. This weakness in demand impacted global nutrient production and industry’s operating rates, but at a different intensity between the nutrients. In the nitrogen sector, ammonia production was rather stable while urea output expanded moderately. Phosphate acid production declined marginally in 2009, while that of phosphate rock dropped. The world potash market collapsed in 2009, as international import demand dropped to its lowest level of the past 30 years. Potash production plunged in 2009, due to a combination of depressed demand worldwide and large stock carry-overs in key importing countries.
International trade levels in 2009 reflected trends in nutrient uses and the shift in imports between raw materials and finished products. The main changes in international imports were the collapse of potash shipments to China, firm sales of DAP to India, and a significant decline in urea import demand into the United States. India featured predominantly in the international markets in 2009, as the world’s largest importer of urea, potash and DAP.
Trade prospects in 2010 for ammonia and potash are very positive. Cost pressure will persist on Ukrainian nitrogen exporters. Strong urea and phosphate import demand is expected in the U.S., South Asia, and Latin America. By the end of 2009, global nutrient consumption exceeded overall sales and should leave the supply pipeline rather empty. The situation in 2010 should see a major reversal trend compared with 2009, with a significant 4 percent growth in global demand and a strong 7 percent rebound on the total sales of the mainstream products. Urea, DAP, and potash trade demand in 2010 is projected to expand 5 percent, 5 percent, and 50 percent, respectively.