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Nitrogen fertilizer industry in transformation Two decades in review - - PowerPoint PPT Presentation
Nitrogen fertilizer industry in transformation Two decades in review - - PowerPoint PPT Presentation
Nitrogen fertilizer industry in transformation Two decades in review and journey ahead Dr Dimitrios Dimitriou Senior Business Advisor Middle East Energy & Chemicals Advisory Megatrends and Fertilizers There are five major
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- Rapid urbanisation
- Climate change and resource scarcity
- Shift in global economic power
- Demographic and social change
- Technological breakthroughs
There are five major socio-economic driving forces
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Combined population and GDP growth fertilizer consumption growing ~10 times since 1960’s
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FERTILIZERS
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Implications for the fertilizer industry
Fertilizer industry: 1.Urbanization results in less land available for agriculture. 2.Production of energy using hydrocarbons directly competes with producing hydrogen/nitrogen based fertilizers. A change in energy policy might free-up reserves for fertilizer production? 3.A growing population driven by birth rates and aging dramatically increases overall demand for food. 4.Demand for (higher quality) food increases dramatically with population rich countries (China and India) becoming more wealthy (increase in GDP per capita). 5.Digital technology solutions are appearing to help farmers increase efficiencies which may push down demand (e.g. digital soil mapping, precise agriculture, accurate weather forecast etc.)
- 6. Environmental implications of fertilizers production and use drive regulation and
fertilizer production (eg. green ammonia) and crop technology (eg. nitrogen fixation)
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The journey
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Industrial nitrogen production has increased 85 times since WWII
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19th century 1910-1913 1913-1934
First ammonia synthesis commercial plant
1910 0.35 million tons 1913 <1 million tons 1934 2 million tons 2010 165 million tons 1946 3 million tons
1946-2018
2018 251 million tons
>99% Haber Bosch 64% Haber Bosch 2% Haber Bosch From 1 plant in 1913 to >1000 ammonia and urea plants in 2018
Timeline of ammonia industry development
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Some key trends over past decades – Global
11 0% 50% 100% 100000 200000 300000 2000 2005 2010 2015 2020 Operating Rate Thousand tons Production Consumption Capacity Operating Rate
- 20000
- 15000
- 10000
- 5000
5000 10000 15000 20000 25000 2000 2005 2010 2015 2020 Thousand tons North America South America Western Europe C&E.Europe Middle East Africa India China Other Asia Pacific
Historic Prices vs Oil
0.0 20.0 40.0 60.0 80.0 100.0 120.0 100 200 300 400 500 600 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $ per barrel $ per ton Ammonia Arab Gulf Urea Arab Gulf Brent Oil
World Trade Urea Supply, Demand and trade Urea
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Some outcomes of overuse
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Some key trends in China
13 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 10000 20000 30000 40000 50000 60000 70000 80000 90000 100000 2000 2005 2010 2015 2020 Operating rate Thousand tons Production Consumption Capacity Operating Rate
Supply, Demand and Trade Urea, China
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% 5000 10000 15000 20000 25000 30000 35000 40000 45000 2000 2005 2010 2015 2020 Operating rate Thousand tons Production Consumption Capacity Operating Rate
Supply, Demand and Trade Urea, India
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Some key trends in North America
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Basins Gas Oil
PacWest Consulting Partners
BAKKEN MARCELLUS BARNETT EAGLE FORD
0% 20% 40% 60% 80% 100% 120% 5000 10000 15000 20000 25000 2000 2005 2010 2015 2020 Operating Rate Thousand tons Production Consumption Capacity OpRate
Supply, Demand and Trade Urea Cash Cost Margins Development Natural Gas prices vs Oil
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Some key trends in the Middle East
16 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 5000 10000 15000 20000 25000 30000 35000 2000 2005 2010 2015 Operating rate Thousand tons Production Consumption Capacity Operating Rate
- 20000
- 15000
- 10000
- 5000
5000 10000 15000 20000 25000 2000 2005 2010 2015 2020 Thousand tons Middle East urea exports
Supply, Demand and Trade Urea Urea Trade from Middle East Cash Cost Margins Development
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Some key trends over past decades –New applications
17 1000 2000 3000 4000 5000 6000 7000 8000 2000 2005 2010 2015 Thousand tons North America South America Western Europe C&E.Europe Middle East Africa 1000 2000 3000 2000 2005 2010 2015 Thousand tons North America South America Western Europe C&E.Europe Middle East Africa India China Other Asia Pacific
DEF Demand by region Biodiesel Demand by region
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Some key trends over past decades –New products
18 North America 18% South America 0.3% Western Europe 4% Eastern Europe 0.2% Middle East 1% Africa 0.1% Asia Pacific (including China) 77%
4 million tons in 2017 (growing at >5% CAGR)
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- Fertilizer overuse and environmental impact!
- Shale gas development and significant decoupling of natural gas prices in the US
from crude oil
- Competitiveness position of US producers improved significantly
- Producers in KSA enjoy a strong advantage on a cash cost basis due to low gas
cost, but limited gas resource for new projects and threat from other exporters rising
- China become a large net exporter of urea threating global market – net exports
recently declined; supply and demand side reforms.
- India and SEA main importing markets
- Africa in focus: under application, large resources and population growth
- From a buoyant market in until mid 2010’s to an oversupplied market today
Nexant views - past
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The road ahead?
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Some key trends to follow?
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- Consistent long term growth due to rising population but at lower rates due to
fertilizer over-application, regulation and nutrient stewardship in major consuming markets
- New products/new markets and new strategies for players in effort to create and
capture value
- Digitalisation impacting demand and supply?
- India emerging as a key producer?
- China further capacity rationalisation, growing environmental drive and lower
exports;
- Middle East continued position as low cost, volume exporter but competitive threat
rising; need for new business strategies!
- Protectionism impacting market - Government changes can lead to trade tensions
- Policy developments are a major driver of future fertilizer supply and demand
China, fertilizer consumption growth has been capped and supply decreasing India, the government is considering options to improve the effectiveness of its fertilizer subsidy scheme and become self sufficient
- Africa emerging a major consuming and producing centre?
Nexant views - future
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