What is in this article?:
- Fertilizers essential component of long-term food security
- Chinese demand declines
• The report clearly highlights the interdependence of the fertilizer industry and the agricultural sector.
• The fertilizer industry is pursuing its steady program of long-term investment in new production sites to respond to an anticipated 11 percent growth in total demand between 2010/11 and 2015/16.
Chinese demand declines
The contribution of China to the increase in world N and P fertilizer demand is, however, declining in comparison to the previous decade.
In 2010, the fertilizer industry operated at an average of 81 percent production capacity, showing improved conditions compared with a rate of 76 percent in 2009.
“Massive investments have been made and will continue being made in the near-term to secure the supply of plant nutrients and improve global food security,” according to Michel Prud’homme, Director of IFA’s Production and International Trade Service.
Over the next five years, global capacity will further increase with close to 250 capacity-related projects and a large number of expansions at existing sites. IFA estimates that about $88 billion will be invested by the fertilizer industry between 2010 and 2015. On average, the global potential supply of mainstream fertilizers is seen as growing by 30 percent by 2015.
Three important factors are driving this surge in investment: the willingness of fertilizer companies to increase local transformation of raw materials; pressures from governments to reduce their respective import reliance on fertilizers supply (for instance, in Brazil, China, India, Pakistan and Vietnam); and the industry’s responsibility to prepare for the future and provide adequate plant nutrients to increase productivity sustainably.
The report also highlights the emergence of new suppliers and exporters, such as Saudi Arabia in the case of DAP and Algeria in that of urea and ammonia. For the first time in IFA’s forecasts, China’s fertilizer production and consumption is seen as slowing down.
This represents a turning point for the Chinese industry, which is more used to overcapacity scenarios. It clearly testifies to the maturity of its market.
For more information on production, trade and sales conditions in 2011 and prospects for 2015, please consult IFA’s Market Outlook Summary http://www.fertilizer.org/ifa/HomePage/FERTILIZERS-THE-INDUSTRY/Market-outlooks.html.