IFA’S VIEW: COVID-19

IMPLICATIONS FOR THE FERTILIZER INDUSTRY

Update 1: Insights from IFA’s Global Markets Conference, Dubai, 3-5 March

IFA Secretariat, France

19 March 2020
Update from IFA Global Markets Conference, Dubai, 3-5 March

COVID-19 Main Disruptions to Fertilizer Industry in China

Shortage of labour (drivers, port workers and other)
Reduced operating rates
Temporary plant closures
Inland logistics bottlenecks (mainly trucks)
Overstocks at port warehouses
High inventories at production sites
Decisive government Delays at terminals
measures
Blocked districts / roads
Source: Image geralt / Pixabay
COVID impact on the industry: China phosphate sector hardest hit
Phosphoric Acid Capacity in China in 2020 COVID-19
21.7 Mt P2O5
Highlighted provinces with PA capacity ≥ 1.0 Mt
Heilongjiang

Jilin

Liaoning
Inner Mongolia Source: Wikipedia
1.2 Mt
Hebei
Hubei (the epicentre of covid-19 spread in China)
Shanxi Shandong 6%
Qinghai
accounts for 1/3 of China’s phosphoric acid capacity
Jiangsu
Xizang Zizhiqu Shaanxi Henan 6.0 Mt Importance of Hubei
Anhui
2.3 Mt Hubei 28% Phos. acid capacity for selected major countries
Zhejiang
Sichuan Chongqing Mt P2O5
10% Hunan
Jiangxi 8.0
7.8
2.9 Mt Guizhou Fujian 6.0
6.0
14% Yunnan 3.8
Guangxi Guangdong 4.0 2.9
3.7 Mt 2.1
2.0
17%
0.0
Morocco Hubei Russia Saudi Arabia Tunisia
Source: IFA Market Intelligence
Importance of China in the global phosphate market
China Phosphoric Acid Capacity Share of China in Global China
Phosphoric Acid Capacity Rest of the World
China Phosphate Exports
Mt P2O5
A 5-fold increase in PA capacity during 2000-2019
25 100% Mt product

80%
DAP MAP
20
TSP Total
15 60%
12.0 11.0
10 40%

5 20% 36% 1.1

10.0
13%
0 0%
2.5

2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
8.0

China DAP Exports Mt product China DAP Trade Balance 6.0

Mt product Shift from a net importer to a net exporter
World’s largest exporter of DAP with a 42% share.
10
10 7.5
4.0
7.5 2.8 7.5
8
5
6 1.0
2.0
0.2 1.0
4 0
0.8
2 DAP Exports 0.0
0.2 DAP Imports 2008 2018
0 -5
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

Source: IFA Market Intelligence

COVID impact on the China industry: Urea operating rates reduced

Urea Capacity in China in 2020 COVID-19

67.0 Mt product
4.8 Mt Heilongjiang
7% 8.5 Mt
13% Jilin

3.4 Mt
Liaoning
Xinjiang Uygur Zhizhiqu Inner Mongolia 5%
Hebei 9.2 Mt Source: Wikipedia
Shanxi Shandong 14%
Qinghai
Jiangsu Hubei (the epicentre of covid-19 spread in China)
Xizang Zizhiqu Shaanxi Henan 5.5 Mt accounts only for 3% of China’s urea capacity
Hubei
Anhui 8%
Sichuan Zhejiang
Chongqing Major impact on urea supply chain due to:
5.0 Mt Hunan
Jiangxi 2.1 Mt
7%
Guizhou Fujian
3%  Logistics constraints dragging urea operating rates lower
Yunnan
Guangxi Guangdong  Higher/built-up of inventory levels at manufacturing sites

 Delays in purchases for agriculture demand

Highlighted provinces with urea capacity ≥ 3.0 Mt product (& Hubei)
 Reduced industrial urea demand due to outage at resin plants
Source: IFA Market Intelligence
Government support: lessons from China, recovery post-covid-19
 Securing supply of raw materials for fertilizer production
(e.g. coal and natural gas) as priority.
1  Offering reduced natural gas prices for gas-based fertilizer Resuming fertilizer production
producers (from mid-Feb till end-Jun).
 Granting loans to fertilizer companies.

 Removing highways tolls (from mid-Feb until end-Jun)

to assist truck transportation.
2 Restoring fertilizer transportation
 Providing fast track for fertilizer logistics.

 Promoting further credit support to fertilizer preparation

for spring planting season from February. The total
amount reached US$814 million.
Supporting agriculture &
3
 Priority of fertilizer supplies to domestic market. fertilizer application
 Farmers encouraged to plant double crop rice.
COVID-19: potential direct impact on global fertilizer demand
Highlight shows only 15 countries with reported coronavirus cases
over 1,000 as of 17 March 2020

82.3 Mt
110.4 Mt
Affected countries Fertilizer demand in
(>1,000 cases) the Rest of the World

China: the largest

USA: 3rd largest France: the largest fertilizer consumer
fertilizer consumer fertilizer consumer in the world (24%
in the world (12% in the EU (3.1 Mt of global demand,
of global demand, nutrients) 46.5 Mt nutrients)
23.2 Mt nutrients) 192.7 Mt nutrients
Iran: 2nd largest
fertilizer consumer in World Total Demand
West Asia after Turkey
Source: IFA Market Intelligence (1.1 Mt nutrients) Source for coronavirus cases: BBC (https://www.bbc.com/news/world-51235105)
COVID-19: potential impact on global fertilizer demand
Back in Lessons from history: global fertilizer demand destruction
2008/2009 Oil price Economy Mt nutrients
collapse slowdown 200
USSR Global
Fertilizer Recession in collapse financial ?
150
affordability key markets crisis
COVID-19
100 pandemic
+ Now in
Covid-19 Pandemic
2020 50
Widespread Labour shortage &
Fertilizer Demand for Agriculture Use
international disruptions due to 0
disruption to quarantine
1962
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
transportation measures
Mt nutrients Year-on-Year Change in Fertilizer Demand for Agriculture Use
New environmental 12
African Swine regulations: 8
Fever: agriculture 4
IMO 2020
& fertilizer 0
consequences
New trade -4 ?
restrictions in -8
place in 2020 -12
1964
1966
1968
1970
1972
1974
1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
Source: IFA Market Intelligence
Evolution of global fertilizer demand by sector
Potash fertilizer demand witnessed the largest year-on-year reduction & a more prolonged negative
impact in response to financial crisis in 2008/2009
Mt Nitrogen Mt Phosphate Mt Potash
40
120 50
2008: -12% 2008: -11%
2008: -3% 45 2009: +10% 35 2009: -15%
100 2009: +5% 2010: +10% 2010: +31%
40 30
2010: 0%
35
80 25
30

60 25 20

20 2007 38.0 15 2007 28.1

Market Adjustment
40 Market Adjustment 2007 96.1 2008 33.5 Market Adjustment 2008 25.0
15 & Recovery Period
& Recovery Period 2008 93.6 2009 36.9 10 & Recovery Period 2009 21.3
(2-3 years)
(1-2 years) 2009 98.1 2010 40.7 (3-4 years) 2010 27.9
10
20 2011 29.9
5
5
N P2O5 K2O
0 0 0

1981
1985
1989
1993
1997
2001
2005
2009
2013
2017
1981
1984
1987
1990
1993
1996
1999
2002
2005
2008
2011
2014
2017
1981
1985
1989
1993
1997
2001
2005
2009
2013
2017

Source: IFA Market Intelligence, fertilizer year converted to calendar year basis
COVID-19: potential direct impact on fertilizer production (urea)
Highlight shows only 15 countries with reported coronavirus cases
over 1,000 as of 17 March 2020

74.9 Mt
97.1 Mt
Affected countries Urea Production in
(>1,000 cases) the Rest of the World

China: the largest

USA: 3rd largest Germany: the urea producer in
urea producer in largest urea the world (30% of
the world (6% of producer in the EU global output, 52.4
global output, 10.5 (2.7 Mt product) Mt product)
Mt product) 172.0 Mt product
Iran: the largest urea
producer in West World Total Urea Production
Asia (6.1 Mt product)
Source: IFA Market Intelligence
COVID-19 : potential direct impact on fertilizer trade (urea exports)
Major Regional Urea Trade Flows (2018)
Highlight shows only 15 countries with reported coronavirus cases
over 1,000 as of 17 March 2020

9.0 Mt
0.9
39.2 Mt
1.1 1.8 0.8
2.1
0.5 Affected countries Urea Exports from
0.9
2.5 (>1,000 cases) the Rest of the World
0.7
1.3
3.0

0.5
2.7 1.7 12.9
4.5
0.9
3.4
0.8
2.2

2.1
Latin America
North America
EECA 48.2 Mt product
Asia (East & South Asia + Oceania)
Europe World Total Urea Exports
West Asia
Africa Source: IFA Market Intelligence
COVID-19 : potential impact on fertilizer trade (urea import demand)
Major Regional Urea Trade Flows (2018)
Highlight shows only 15 countries with reported coronavirus cases
over 1,000 as of 17 March 2020

12.0 Mt
36.2 Mt
Affected countries Urea Imports from
(>1,000 cases) the Rest of the World

USA: 2nd largest

urea importer in the
world after India 48.2 Mt product
France: the largest
(12% of global
trade, 5.7 Mt urea importer in the
Urea imports in the
affected EU countries:
World Total Urea Imports
product) EU (1.3 Mt product) 4.6 Mt product
Source: IFA Market Intelligence
COVID-19 : potential direct impact on fertilizer production (DAP)

Highlight shows only 15 countries with reported coronavirus cases

over 1,000 as of 17 March 2020

15.0 Mt
18.7 Mt
Affected countries DAP Production in
(>1,000 cases) the Rest of the World

China: the largest

USA: 4th largest DAP producer in
DAP producer in the world (48% of
the world (7% of global output, 16.2
global output, 2.5 Mt product)
Mt product) 33.7 Mt product
World Total DAP Production
Source: IFA Market Intelligence
COVID-19: potential direct impact on fertilizer production (MOP)
Highlight shows only 15 countries with reported coronavirus cases
over 1,000 as of 17 March 2020

11.8 Mt
56.9 Mt
Affected countries MOP production in
(>1,000 cases) the Rest of the World

China: 4th largest MOP

Germany: the largest producer in the world after
MOP producer in the Canada, Belarus and
EU (7% of global Russia (10% of global
output, 4.5 Mt product) output, 7.0 Mt product)
68.7 Mt product
World Total MOP Production
Source: IFA Market Intelligence Source for coronavirus cases: BBC (https://www.bbc.com/news/world-51235105)
IFA’s COVID-19 INFORMATION CENTRE
on IFA website
provides updates on implications for
* Global Economy
* Fertilizer Supply Chain
* Country Experiences

Please, contact IFA Secretariat to share your feedback on

coronavirus impact on the fertilizer industry worldwide

For questions and comments on

this webinar please contact
Marina Simonova on
msimonova@fertilizer.org