Top Banner
Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009
22

Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Mar 31, 2015

Download

Documents

Chris Rhead
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Page 1: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Back to the Future: The Outlook Post-Boom

Bernard Brentnall, DirectorFertilizer & Chemical Consultancy Ltd

FAI MeetingFebruary, 2009

Page 2: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Top-5 Urea Producers, 2007

Source: IFA/FCC

Page 3: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Top-5 Urea Exporters, 2007

Source: FCC/IFANote: China includes adjustment for cross-border sales to Vietnam

Page 4: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Top-5 MAP/DAP Producers, 2007

Source: IFA

Page 5: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Top-5 MAP/DAP Exporters, 2007

Source: IFA

Page 6: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

What Now (1)?The normal post-boom symptoms:

• Stocks of high-cost material• Inability to purchase until stocks are sold• Nervousness amongst those purchasers in a

position to purchase new product• Hand-to-mouth trading and purchasing• Doubts as to the viability/reliability of

importers/merchants

Page 7: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

What Now(2)?Post-boom peculiarities in 2009:

• The gumming up of the financial and credit systems: LCs, collateral, trust.

• No build-up of grain and food stocks• Bio-fuels are built into the system• A rapid response in production cut-backs• All quiet on the project front – capital costs

have risen by 50-100% during the last cycle.

Page 8: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

What Next?Is looking back a guide to the future?

• All nutrients were in chronic oversupply. Now they are not.

• A new cost structure has been established.• There are differences between the nitrogen

and extractive industries based on the distribution of resources

Page 9: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Nitrogen

Page 10: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Prilled Urea fob Middle EastCurrent US$/t

High Low1974-75 390 401985-86 200 801995-96 240 632008-09 815 240

Page 11: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

…and the end of a Super-Cycle (since 1973).

Source: FMB/FCC/IMF

Page 12: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Ukraine: New Feedstock Situation (from January 2009) Costs to fob, 2010Oil Price US$ per bbl

AmmoniaUS$/t

UreaUS$/t

@40 225-310 170-215@70 330-430 245-300@100 435-565 320-385

Note: Effective oil input price (given lag mechanism) 2009 Average= c. US$75 per bbl

Page 13: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Urea Project Outlook

UREA Total 2008 2009 2010 2011/2012

Incremental Capacity (Excl.China)

19.6 2.7 4.6 3.1 9.2

Total Urea market (2007) 141.1

Proportion 13.9%

Page 14: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

China: Incremental Urea Capacity

• +16.8 million t/a new urea capacity due 2008-11• But will feedstock be available/suitably priced? − Natural gas remains subsidised at US$2.5-3.5 per MMbtu− Reports of closures of coal-based nitrogen units (total existing

capacity c.12-15 million tonnes N)

Page 15: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Phosphates

Page 16: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

DAP US Gulf fob Bulk

Source: FMB

Page 17: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Phosphate Rock Reserves(billion tonnes)

Reserves % ShareWorld 18.0 100%Of which:China 6.6 37%OCP 5.7 32%Others 5.7 31%

Source: US Geological Survey

Page 18: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Potash

Page 19: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Average Standard MOP fob Vancouver

Source: FMB

Page 20: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

KCL Production and Exports, 2007

Source: IFA

Page 21: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Whither Potash?• The only obvious locations for new mines are

Canada, Russia and, perhaps, Belarus.• Grassroots projects cost up to US$ 2.5 billion for

2 million t/a. Uralkali was looking at a breakeven of US$ 500/t KCl at a new mine.

• Savings of about 30% can be made using an existing location – PotashCorp and Mosaic.

• Supply management has a 30 year history. The need for cash-flow is the one weakness.

Page 22: Back to the Future: The Outlook Post-Boom Bernard Brentnall, Director Fertilizer & Chemical Consultancy Ltd FAI Meeting February, 2009.

Thank you for your attention

Bernard Brentnall, DirectorFertilizer & Chemical Consultancy LtdFMB House, 6 Windmill Road, Hampton Hill, Middlesex TW12 1RH, UKTel: +44 20 8979 7866; Fax:+44 20 8979 4573Email: [email protected]

www.fertchem.co.uk