Outlook For Phosphate Fertilizers and Raw Materials

Fertecon
Outlook for phosphate

fertilizers and raw materials
Alberto Persona, Principal Analyst – Phosphates and Potash

February 2023
Copyright © 2023 S&P Global.

Permission to reprint or distribute any content from this presentation requires the prior written approval of S&P Global.
Contents
Part I: Phosphate fertilizers

- Recent price movements and trade flows
- Demand disruption
- Production costs
- Investment
Part II: Phosphate raw materials
- Recent price movements and trade flows
- Demand disruption… wait, why not?
- Margin analysis for exporters/importers
- Projects
Part III: Sustainability
- Nano-fertilizers
- De-carbonization: not just an ammonia story
- Electronic vehicles
- Nutrient recycling
Copyright © 2022
2023 S&P Global. 2
Part I: Phosphate
fertilizers
Copyright © 2022 S&P Global. 3

2022: shocks drive
expectations and
volatility

Recent price trends
Key delivered price benchmarks
1400
1200
Prices have continued to decline throughout Q4 2022,

1000
with some increases observed in Brazil on the back of
good consumption and lower stocks, however also
800
reflecting a rebound from an over-correction
USD/t
600
downwards.
European prices keep trading at a significant premium,
400 however demand remains sluggish. India is taking full
advantage of its renewed bargaining position.
200
Overall, prices have settled below levels pre-dating the
0
Russia-Ukraine war and the peak of the energy crisis in
late 2021.
Jan-19
Jul-19
Jan-20
Jul-20
Jan-21
Jul-21
Jan-22
Jul-22
Jan-23
Mar-19
Mar-20
Mar-21
Mar-22
Nov-19
Nov-20
Nov-21
Nov-22
Sep-19
Sep-20
Sep-21
Sep-22
May-19
May-20
May-21
May-22
DAP del NE China DAP fca Benelux DAP cfr India
DAP fob NOLA barge MAP cfr Brazil
Source: SP Global Commodity Insights

Trade flows: from the
resilience of 2020 to
significant swings in
2022

Trade flow changes: replacing mainland China and diverting Russian volumes
2000 Q1-Q3 2021 2000 Q1-Q3 2022
1500 1500
‘000t P2O5
‘000t P2O5
1000 1000
500 500
0 0
Oth Oth
EUR EUR
NAM NAM
EUA EUA
MEA MEA
AFR AFR
EAS EAS
EUA
EUA
CAS
OCE
EUR
OCE
EUR
MEA
NAM
CAS
MEA
NAM
LAM
UND
UND
LAM
EAS
SEA
SAS
EAS
SEA
SAS
AFR
AFR
Trade recovered in Q3, still at low cyclical levels
Quarterly trade volume, total P2O5
7,000
6,000
5,000
'000t P2O5
4,000
3,000
2,000
Trade across all phosphate-bearing synthetic fertilizers
1,000
(complexes and superphosphates) has lagged against
0 recent averages, with a slow start of the year matched
by a particularly weak Q2.
6,500
Volumes have recovered in Q3 and came back in line
with 2018, however cumulative volumes remain lower
6,000
and demand in Q4 – while still limited in some regions –
'000t P2O5
5,500
has been mostly fostered by significant price
5,000 decreases.
4,500
4,000
Q1 Q2 Q3 Q4
2018 2019 2020 2021 2022

Seasonality matters: India loses its price-setting ability
Quarterly P2O5 imports for selected regions
3,000
2,500
'000t P2O5
2,000
Southern Asia used to be the seasonal driver of
1,500
1,000
demand and had significant leverage on pricing (see
500 the green line peaking above all others).
0
Demand growth in Latin America however inverted this
significantly: low-season buying in the region is now on
Europe Southern Asia Southeast Asia North America Latin America
par with peak-season buying before 2015.
100%
Higher import demand in other markets also allows
80% producers to find alternative outlets when demand from
% of trade
60% a specific region is sluggish. This is further enhanced

40% by primary producers investing in warehouses and
20%
distribution assets.
0%
Only the severe disruptions of 2022 saw Southern Asia
climb back to the highest spot.
Europe Africa Middle East Southern Asia Eastern Asia
Southeast Asia Oceania North America Latin America

Demand disruption:
supply-led or price-
driven?

Demand disruption becomes increasingly visible
Demand change as total P2O5, 2021 vs 2022
52,000
Progressive data releases are starting to provide a

clearer picture of the magnitude of demand disruption in
50,000
2022.
Demand disruption occurred due to a combination of
48,000 three factors, often working alongside each other:
'000t P2O5
- Low availability from key suppliers

46,000
- Low affordability due to high prices
- Adverse weather
44,000
The net result is an overall decline for demand in the
region of about 4 million tonnes P2O5 year-on-year –
42,000 undoing a whole decade of growth.
Total Blank Down Up

Imports are also down in most regions, with one clear exception
Import change as total P2O5, 2021 vs 2022
23,000 Since the 2008/09 financial crisis, markets have
become increasingly globalized: frictionless trade in
22,000 goods and capital allowed for capacity to grow in cost-
efficient regions, ensuring surpluses emerged where
efficient and deficits were easily met. Testament to this,
21,000
fertilizer markets were almost unaffected by Covid-19 in
2020.
'000t P2O5
20,000
2021 and even more so 2022 saw a sharp inversion of
this trend, with nationalisms emerging in many areas
19,000 and domestic demand and farm cost inflation prioritized
over economic growth.
18,000 Unsurprisingly, this meant that supply-side disruptions
were not as easily re-allocated, and structural deficits
could not easily be fulfilled. 2022 appears on trend to
17,000
see a reduction in total P2O5 imports by about 3 million
tonnes P2O5 – about 75% of total demand
Total Blank Down Up
disappearance.

Looking at the export side helps separate two separate trends
Export change as total P2O5, 2021 vs 2022
23,000
The sharpest declines in exports were observed in

22,000
Northern Africa and Eastern Asia. The two have very
different rationales:
21,000
- In Eastern Asia, the main bottleneck was the
presence of export restrictions out of mainland
'000t P2O5
20,000 China (inspections and permits in H1, quotas in H2)

- In Northern Africa, the main bottleneck was instead
19,000 the lack of sufficient demand to try and place
volumes (also partly due to higher production in key
importing countries, like the United States or Brazil)
18,000
17,000 Eurasia (primarily Russia) instead increased slightly its

exports year-on-year.
Total Blank Down Up

The supply side: facing
a high-cost scenario

Production costs remain elevated
DAP coastal cost index
1,200
1,000
While sulphur prices had already corrected

800 considerably in late Q3 2022, ammonia prices remain
high on the back of strong import demand in Europe
USD/t DAP
and gas prices remaining high despite significant

600 Ammonia
downwards corrections in Q4 2022.
Sulphur
PhosRock A lower cost basis is set not to transfer immediately to
400 prices, yet it has clearly already fostered a recovery in
utilization rates in mainland China – relieving some of
the pressure on domestic producers when asked to
200
bring domestic stocks back to pre-Covid levels.
-
18M05
19M07
20M09
21M11
18M01
18M03
18M07
18M09
18M11
19M01
19M03
19M05
19M09
19M11
20M01
20M03
20M05
20M07
20M11
21M01
21M03
21M05
21M07
21M09
22M01
22M03
22M05
22M07
22M09
22M11

Africa moved up on the cost curve due to ammonia procurement
DAP cost curve highlighting producers in Africa (Q4 2022)
900
800
700
Following on the previous comments, investment in
600
new capacity in Africa appears now somewhat less
attractive, having shown its exposure to strong
USD/t DAP EXW
500 fluctuations in imported input prices (particularly

ammonia) as a result, even OCP in Morocco, despite its
400 world-class mining assets and mine-to-plant logistics,
finds itself towards the middle of the cost curve.
300
Unsurprisingly, producers in the region have started to
200 consider options to try and reduce this exposure in the
longer term…
100
Africa Others

High costs do have consequences on production choices
Utilization rates in China

80%
High production costs can typically be transferred to
70% buyers in commercial markets – yet this is not always
60%
the case. Governments can put significant pressure on
local industries to keep prices as flat as possible, as
50% was the case in mainland China.
% capacity
40% Export restrictions aimed at over-supplying the market

caused instead international phosphate prices to
30%
increase significantly, lifting sulphur prices at a time
20% when ammonia was already expensive – eventually
10%
forcing producers to reduce their operating rates, and
prolonging a situation of low domestic stocks.
0%
Looking at reported operating rates, there’s signs that
the situation is improving on a sustainable path.
MAP DAP NPK
Source: Longzhong, SP Global Commodity Insights

High cash flow
encourages new
investments

Demand growth to be met by more investment
Demand growth (top) and expected capacity (bottom)
3,000 Demand is expected to keep increasing in the longer
2,500 term, albeit at a smaller rate compared to the previous
decade in most regions.
'000t P2O5
2,000
1,500 Demand growth in Latin America may however be

1,000 subject to significant downside risk should the
500 agricultural sector show keen interest in adopting
- practices that can be claimed as more “environmentally
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
friendly”.
Europe/Eurasia Africa APAC Americas
3,000
On the other side of the ledger, demand in Africa could
increase faster than projected should successful
2,500
investment programs remove bottlenecks.
2,000
'000t P2O5
1,500 More capacity will eventually be needed to meet this

1,000 growing demand, with the Middle East currently
500 endowed with the best investment case on a
0 competitiveness basis, and Eurasia struggling to attract
2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
international investment.
EUA NAF MEA SAS SEA SAM

OCP’s new plans, Ma’aden awards EPC, Eti Bakir and Indonesia expand capacity
OCP has presented in mid-December 2022 an

ambitious expansion programme, with plans to develop
green ammonia capacity and a new greenfield complex
in Mzinda (between Youssoufia and Safi). Plans also
tackle another critical raw material: water. OCP’s total
planned investment totals close to 13 billion USD.
Ma’aden in the meantime announced the award of the
EPC contract for its third phosphate unit, dispelling
concerns about its commitment to phosphates in the
face of successful business in the blue ammonia space.
Benefitting from integrated smelter acid availability, Eti
Bakir is also planning to increase DAP capacity in
Samsun (albeit at a much smaller scale compared to
OCP and Ma’aden).
Pupuk Iskandar Muda has also started its new NPK
production unit in Aceh.
Kazphosphate, under new ownership, also increased
capacity by 1 million tonnes ammophos (NP 11:46).
Source: Company websites

Part II: Phosphate raw
materials

Recent price dynamics

Recent price trends
Key delivered price benchmarks
3000
2500
2000
Prices have followed roughly the same trends as

USD/t P2O5
1500 fertilizer markets – with a sharp peak between late 2021

and Q3 2022. The peak in P4 prices followed different
1000 dynamics, yet this happened roughly at the same time.
500
Prices are correcting downwards, yet they remain at
0
cyclically high levels.
2011Q1
2019Q3
2010Q1
2010Q3
2011Q3
2012Q1
2012Q3
2013Q1
2013Q3
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q1
2018Q3
2019Q1
2020Q1
2020Q3
2021Q1
2021Q3
2022Q1
2022Q3
2023Q1
MGA P4 PWA
Rock <=68 BPL Rock >=78 BPL ign Rock >=78 BPL sed
Rock 69-77 BPL

Trade flows

Phosphate rock trade flows
Q1-Q3 2021 (total: 7.4 mln t P2O5) Q1-Q3 2022 (total: 6.4 mln t P2O5)

MGA trade flows
Q1-Q3 2021 (total: 2.9 mln t P2O5) Q1-Q3 2022 (total: 2.8 mln t P2O5)

Demand disruption?

No clear signs of genuine disruption despite high prices
MGA/rock import changes as total P2O5, 2021 vs 2022
7,600 3,000
PhosRock MGA
7,400
2,900
7,200
7,000
2,800
'000t P2O5
'000t P2O5
6,800
2,700
6,600
6,400
2,600
6,200
6,000 2,500
2021 EUR EUA SAS LAM MEA AFR OCE NAM EAS UND SEA CAS 2022 2021 EUR LAM MEA SEA EUA CAS UND OCE AFR EAS SAS NAM 2022
Total Blank Down Up Total Blank Down Up

Margin analysis

MGA costs have genuinely increased
Weighted average MGA ex-works cost by region
1400
1200
1000
USD/t P2O5
800 Phosphoric acid production costs have genuinely

increased throughout 2021 and 2022 – in a virtuous
600
cycle with sulphur and sulphuric acid prices.
400 It wasn’t until Q3 2022, when low phosphate operating
rates drove sulphur prices to drop sharply, that the
200
situation hadn’t been eased – yet higher energy costs
0
keep mining costs high even for integrated producers
2011Q1
2019Q3
2010Q1
2010Q3
2011Q3
2012Q1
2012Q3
2013Q1
2013Q3
2014Q1
2014Q3
2015Q1
2015Q3
2016Q1
2016Q3
2017Q1
2017Q3
2018Q1
2018Q3
2019Q1
2020Q1
2020Q3
2021Q1
2021Q3
2022Q1
2022Q3
2023Q1
(and phosphate rock prices remain high).
Southern Europe Northern Europe Eastern Europe Central Asia

Eurasia Northern Africa Southern Africa Western Africa
Middle East Eastern Asia Oceania Southeast Asia
Southern Asia North America Latin America

OCP’s value-chain margins
Comparable P2O5 margins across the P value chain
1600
1400
The chart compares DAP/MAP, MGA and phosphate

1200
rock in terms of its revenues per tonne P2O5, net of all
1000
non-phosphate costs.
USD/t P2O5
The overall upwards trend has already been discussed

800
– what is perhaps more interesting is to note how:
600 - The latest MGA prices cfr India represent the least
remunerative sales channel for OCP
400
- Phosphate rock prices are now the most
200 remunerative sales channel instead
Both of these are highly unusual patterns, which appear
0
not sustainable in the longer term.
Rock MGA DAP MAP

India’s import breakeven prices
Breakeven cfr India MGA prices by downstream grade
2500
2000
Prices have been sitting above breakeven almost

1500 continuously since late 2020 – noting that a larger
proportion of affordability is currently relying on
USD/t P2O5
1000
subsidies rather than actual market forces.
The recent decline in prices cfr India was below
500
breakeven for all grades for the first time in many years
– and it is to an extent testament to changes in the
bargaining strategy of Indian companies themselves.
0
Potential downwards revisions to NBS rates will reduce
2017M01
2017M03
2017M05
2017M07
2017M09
2017M11
2018M01
2018M03
2018M05
2018M07
2018M09
2018M11
2019M01
2019M04
2019M06
2019M08
2019M10
2019M12
2020M02
2020M04
2020M06
2020M08
2020M10
2020M12
2021M02
2021M04
2021M07
2021M09
2021M11
2022M01
2022M03
2022M05
2022M07
2022M09
2022M11
2023M01
the breakeven
-500
Actual cfr India DAP - MGA

NP 20:20:0:13S - MGA, ImpS NPK 12:32:16 - MGA
NPK 10:26:26 - MGA

The impact of corporate integration
Cfr India prices including share of JV margins
2000
1800
1600 MGA cfr India

1400 Coromandel
USD/t P2O5
1200 Deepak
GSFC
1000
IFFCO
800
Indorama
600
PPL
400
Government of India
200 Government of India (including indirect stakes)
0 Government of India (including import tariffs)
2018M01
2018M02
2018M03
2018M04
2018M05
2018M06
2018M08
2018M09
2018M10
2018M11
2018M12
2019M01
2019M02
2019M04
2019M05
2019M06
2019M07
2019M08
2019M09
2019M10
2019M12
2020M01
2020M02
2020M03
2020M04
2020M05
2020M07
2020M08
2020M09
2020M10
2020M11
2020M12
2021M01
2021M03
2021M04
2021M05
2021M06
2021M07
2021M08
2021M09
2021M11
2021M12
2022M01
2022M02
2022M03
2022M04
2022M06
2022M07
2022M08
2022M09
2022M10
2022M11
2022M12
2023M02
Investing in joint-ventures abroad is not always the most remunerative option – yet clearly it offers a meaningful way of
reducing the average corporate realized price. The advantage gained is a function of the degree of actual integration
(especially whether or not equity involves mining activities as well as phosphoric acid manufacturing), as well as corporate
tax rates (and possibly tax windows) in the relevant geographies.

Projects

Projects on the horizon
Selected phosphate rock and MGA projects
Arianne Phosphate: design only at this stage,
main bottleneck is its CAPEX bill
OCP: new investment plan designed as

balanced between rock/acid/fertilizers
Algeria: reviving once again downstream

integration project – possibly with European
partners
Tunisia: private-sector investments by PhosCo

may provide needed diversification
Egypt: Serbian partnership pushes At-Phos

MGA project further
Jordan: new mines and MGA lines to feed

expanded logistical investments
Source: SP Global Commodity Insights. Microsoft product screen shot(s) reprinted with permission from Microsoft Corporation. © 2023 S&P Global Commodity And, of course, Adani could provide a
Insights. All rights reserved. Provided “as is”, without any warranty. This map is not to be reproduced or disseminated and is not to be used nor cited as evidence in
connection with any territorial claim. S&P Global is impartial and not an authority on international boundaries which might be subject to unresolved claims by significant boost to Indian phosphoric acid
multiple jurisdictions.
availability.

Part III: Sustainability

India can become a leading force in terms of industry restructuring
Demand of phosphate fertilizers in terms Producers of phosphate fertilizers in

of P2O5 content, 2022 terms of P2O5 content, 2022
18%
13%
10%
China (mainland) India Brazil China (mainland) United States India

United States Europe Bangladesh Russia Morocco Saudi Arabia
Australia Morocco Canada Europe Brazil Egypt
Others Others

Nano-fertilizers (i.e.
nutrient use efficiency)

Increased efficiency of use has a place to be in India
Indian P2O5 demand vs. extraction India uses significantly more nutrient than what is
10,000 required by plants given current yields. This is partly
9,000 due to weather patterns: seasonal monsoonal
8,000 rainfall causes higher losses for nutrients applied in
7,000 granular form.
‘000t P2O5
6,000
5,000
Efficient application in India (and elsewhere) could
4,000
well cause a sharp reduction in fertilizer demand –
3,000
2,000
the key question is the speed of adoption of these
1,000
new formulations.
0
As an example, Mosaic planned close to 10 years of
field trials before its NP+S line became widely
Grains OilCrops
accepted in the US market. Strong growth in the
SugarCrops Fruits and Vegetables
Others Demand
uptake of fully-soluble products (e.g. FS-MAP in
Xinjiang province) is related to new land under new
farming technology (drip irrigation), not to product
switch. .

Nutrient recycling

Recovered nutrients: the case of the EU
EU P2O5 demand as chemical products over time Potential demand and supply of P2O5 in EU countries (2021)
10,000 7 6,000
9,000
6 5,000
8,000 Eastern Europe
7,000 5 4,000
‘000t P2O5
‘000t nutrient
6,000 Northern Europe

4
3,000
t/ha
5,000
Southern Europe
4,000 3
2,000
3,000 2 Western Europe
2,000 1,000
1 Average wheat yield
1,000
(right axis) 0
0 0 Removal split Organic potential Chemical P2O5
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
2010
2013
2016
2019
Extraction (harvested) Plant residue Manure Sewage Chemical Residual
From July 2022, the EU’s Fertilizer Product Regulation (FPR) came into force. This adds to the Animal By-Products (ABP) regulation and
tries to provide a regulatory framework to increase nutrient recycling rates – both improving the trade profile of currently recycled nutrients,
and incentivizing the recovery of current waste streams. All within the wider framework of emission reductions (Fit-for-55) and broader
environmental sustainability (Farm-to-Fork).
To an extent, the EU would have the theoretical ability to become completely self-sufficient on P2O5 – a highly unlikely scenario, but
directionally an important one. Also, food manufacturers are becoming increasingly involved in similar developments.

An untapped resource: Indian organic-origin fertilizers
Potential for organic-origin fertilizers in India

9,000
Total assessed waste streams (not accounting for food waste) could
8,000
easily displace the entire chemical fertilizer application.
7,000
6,000
This is highly unlikely – geographical distribution and low product
grades would be impossible challenges to overcome.
‘000t P2O5
5,000
4,000 Yet let’s assume a 25% recovery for manure (i.e. roughly assume
50% of male cattle), 75% for plant residue, 10% for rural waste, 90%
3,000 for urban waste… suddenly we identify close to 40% of chemical
2,000 P2O5 demand, and close to 50% of plant need!
1,000
India’s top-20 cities alone could produce close to 80-100,000t P2O5
0 as recovered sources. 6 of these 20 cities are feasibly close to
Removal split Organic potential Adoption estimate Chemical P2O5 existing phosphate manufacturing complexes – and others may offer
Extraction (harvested) Plant residue Cattle manure new supply routes to inland areas facing high freight cost bills.
Other manure Urban waste Rural waste
Chemical fertilizers
Source: S&P Global Commodity Insights

De-carbonization

De-carbonization is not just an ammonia story
Phosphoric acid production routes
Thermal route: 4 Ca5(PO4)3F + 18 SiO2 + 30 C → 3 P4 + 30 CO + 18 CaSiO3 + 2 CaF2 P4 production
P4 + 5O2 + 6 H2O → P4O10 + 6 H2O → 4 H3PO4
Sulphuric acid route: Ca5(PO4)3OH + 5 H2SO4 → 3 H3PO4 + 5 CaSO4 + H2O
Hydrochloric acid route: Ca3(PO4)2 + 6 HCl → 3 CaCl2 + 2 H3PO4
EcoPhos “loop”: CaCl2 + H2SO4 → CaSO4 + 2 HCl regenerating HCl
Nitric acid route: CH4 + 2 H2O → CO2 + 4 H2 steam reforming (feedstock already desulphurized)
3 H2 + N2 → 2 NH3 ammonia production
2 NH3 + 4 O2 + H2O→ 2 HNO3 + 3 H2O nitric acid production
Ca3(PO4)2 + 6 HNO3 + 12 H2O → 2 H3PO4 + 3 Ca(NO3)2 + 12 H2O

Thinking laterally: green furnaces
Steel production outside mainland

China Current flow for phosphorus production:
4 Ca5(PO4)3F + 18 SiO2 + 30 C →
3 P4 + 30 CO + 18 CaSiO3 + 2 CaF2
Potential flow for “green phosphorus”:
4 Ca5(PO4)3F + 18 SiO2 + 30 H2 →
3 P4 + 30 H2O + 18 CaSiO3 + 2 CaF2
India’s steel industry may have the scale to support
R&D into hydrogen as a REDOX agent in electric
European Union India Japan arc furnaces – which could have technological spill-
United States Russia South Korea
overs into phosphorus and phosphoric acid
Turkey Brazil Iran
Others
Source: S&P Global Commodity Insights

Electric vehicles

Batteries: underlying demand drivers
Key demand drivers Choices for cathodes

Automotive (and NMC (nickel, manganese,
transportation in general), cobalt). Pro: good and proven
following the growing trend of performance. Con: concentrated
electrification supply (particularly cobalt), risk
of explosion in high temperatures
Portable electronic devices Solid-state batteries. Pro:

(smartphones, laptops…) – possibly the best performance.
the original demand Con: still in development –
originator unproven at a commercial scale.
Static Energy Storage Lithium-ion batteries (particularly

(helping store, stabilize, and Lithium Iron Phosphate – LFP).
distribute excess power Pro: much cheaper compared to
supply) NMC, lower risk. Con: lower
performance

Vehicle electrification is expected to be growing fast
Li-ion battery demand projections Li-ion battery capacity projections

1800 1800
1600 1600
1400 1400
1200 1200
1000
GWh
1000
GWh
800
800
600
600
400
400
200
200
0
0
Mainland China Europe North America

Automotive Portable electronics Energy storage Japan South Korea Demand

Impact on P2O5: not small numbers, not far into the future
FeP and LFP Supply/Demand in

mainland China Demand for LFP manufacturing is expected to reach close to 2 million
6000 tonnes already by 2025 – equal to about 900,000t P2O5.
5000 Technical-grade MAP is becoming the product of choice when moving

phosphate from Southwest China to battery manufacturing facilities in
4000 Eastern China. There is ongoing transition away from thermal to wet-
process phosphoric acid as the raw material of choice (due to lower
‘000t
3000 costs and a thinner environmental footprint basis current technology).
2000 As LFP yields a higher revenue compared to fertilizer-grade sales,

producers are re-focussing their plants – meaning close to 500,000t
DAP/MAP could disappear from fertilizer markets (and more in the
1000
longer-term).
0
2015 FeP 2025 2015 LFP 2025
Capacity Demand

Conclusions

Conclusions
2022 in short: low availability and high prices disrupted global demand significantly – yet the impact on phosphate raw materials was
minimal and geographically constrained (mostly Europe).
For fertilizer markets, seasonality has become increasingly variable, and India’s role has changed considerably in international markets.
Producers globally have indeed faced significantly higher costs, with only a few exceptions.
With a lot of additional cash available, new investment waves are already taking shape – yet this is currently skewed on the primary supply
side (as buyers instead faced thin or negative margins).
Key watchouts:
- We expect still no restrictions on Russian fertilizer trade, as was the case in 2022
- We also expect exports from mainland China to increase somewhat from April onwards, yet to remain well below 2017-2021 levels
- Demand is set to recover only partially on a global scale, keeping pressure on suppliers
- Affordability remains a big issue – and one that could keep demand depressed in some areas
- Phosphoric acid prices will heavily depend on subsidy rates – Q1 prices are below breakeven, but this should not be taken for granted
- In the longer term, India could set the agenda on fertilizer production, with plenty of opportunity to reshuffle industrial flows

Thank you!

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Fertecon

Outlook for phosphate

Alberto Persona, Principal Analyst – Phosphates and Potash

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Part I: Phosphate fertilizers

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Prices have continued to decline throughout Q4 2022,

Source: SP Global Commodity Insights

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2000 Q1-Q3 2021 2000 Q1-Q3 2022

2018 2019 2020 2021 2022

Source: SP Global Commodity Insights

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60% a specific region is sluggish. This is further enhanced

Source: SP Global Commodity Insights

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Progressive data releases are starting to provide a

- Low availability from key suppliers

Total Blank Down Up

Source: SP Global Commodity Insights

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Source: SP Global Commodity Insights

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The sharpest declines in exports were observed in

20,000 China (inspections and permits in H1, quotas in H2)

17,000 Eurasia (primarily Russia) instead increased slightly its

Source: SP Global Commodity Insights

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While sulphur prices had already corrected

and gas prices remaining high despite significant

Source: SP Global Commodity Insights

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500 fluctuations in imported input prices (particularly

Source: SP Global Commodity Insights

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Utilization rates in China

40% Export restrictions aimed at over-supplying the market

MAP DAP NPK

Source: Longzhong, SP Global Commodity Insights

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1,500 Demand growth in Latin America may however be

1,500 More capacity will eventually be needed to meet this

Source: SP Global Commodity Insights

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OCP has presented in mid-December 2022 an

Source: Company websites

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Prices have followed roughly the same trends as

1500 fertilizer markets – with a sharp peak between late 2021

Source: SP Global Commodity Insights

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Source: SP Global Commodity Insights

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Source: SP Global Commodity Insights

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