Charlotte Hebebrand, director general of the International Fertilizer Industry Association (IFA), said recently that the global fertilizer market is facing the risk of continued increases in production capacity. Several new factories were put into operation worldwide in 2017, with only modest increases in demand. Statistics show that the global fertilizer market in 2016 has been deeply affected by the imbalance between supply and demand, sluggish economic growth, sluggish crop prices and continued fluctuations in energy prices. This uncertainty over the fertilizer market will continue in the next three years.
The imbalance between supply and demand will continue
According to the International Fertilizer Industry Association (IFA) statistics, in 2017, global fertilizer production capacity increased by 1.8% to 253 million tons. Nearly 100 new fertilizer production plants and expansion projects were put into operation in 2016 and 2017 with an additional capacity of 19 million tons. The main products are ammonia, phosphoric acid and potash fertilizer.
IFA expects the world’s demand for fertilizers to grow at an average annual rate of 1.5% in the next five years to reach 199 million tons, of which 112 million tons are nitrogen fertilizer, 48 million tons are phosphate fertilizer and 38 million tons are potash fertilizer. Potash demand is expected to grow at a maximum of 2.1% per annum, faster than phosphate (1.5% per annum) and nitrogen (1.2% pa).
Hebebrand pointed out that in the next five years, Latin America, South Asia and East Asia will account for nearly three-fourths of the expected increase in fertilizer demand. Relatively speaking, Africa, Eastern Europe and Central Asia will be the markets with the fastest growth in demand, while growth in Western Europe, North America, Northeast Asia and China is not expected to increase significantly.
As for supply and demand prospects, the contradiction between the continuous growth of potential supply and the slow growth of demand will be aggravated. The past few years, driven by investment decisions, a large number of new capacity gradually put into use. In particular, the additional nitrogen and potassium production capacity may exacerbate the imbalance between supply and demand in the short term. This situation is not expected to improve until 2019.
More stringent regulation
In addition to oversupply, Hebebrand believes major factors affecting the fertilizer market include tougher regulatory regimes, more volatile energy prices, rising competition for raw materials for production and rising trade barriers.
IFA plans to step up its regulatory changes over the next three years and has started to track and monitor some national policies that have a significant impact on fertilizer demand, such as fertilizer subsidies and crop nutrition regulations. Fertilizer production, distribution and utilization are mainly managed at the national or regional level.
In addition, relevant UN agencies and some national policy departments as well as environmental non-governmental organizations (NGOs) pay close attention to the problem of soil environmental pollution caused by the loss of fertilizer after chemical fertilizer application. Although fertilizer loss is not the only source of water nutrients, the fertilizer industry is still paying special attention to the eutrophication of water bodies caused by the loss of fertilizer. After the conclusion of the Paris Agreement, IFA expects that the industry will pay more attention to greenhouse gas emissions from chemical fertilizer use and production, but at the same time it is also an opportunity to further raise awareness of the importance of chemical fertilizers in carbon sequestration.
“The industry must address these issues proactively and demonstrate that we are not only committed to helping solve the food supply problems posed by the growing global population, but are also trying to reduce their impact on the environment. We can promote the management of fertilizers through knowledge sharing, Farmers, policy departments and other stakeholders to reach this ambitious goal, “said Hebebrand.
She said: “In addition to paying close attention to the major UN processes and initiatives, IFA has participated in a series of Global Nutrivarities Management Partnerships (GPNMs) designed to reduce eutrophication caused by agricultural and industrial activities and to protect the marine environment from Land-based activities influence multi-stakeholder platforms such as the Global Action Program (GPA) to underscore the efforts of the fertilizer industry and the importance of science. The IFA is also promoting cooperation with the United Nations at major United Nations conferences such as the High-Level Political Forum or the Climate Change Conference The realization of sustainable development goals and so on. ”
Promote Fertilization “4R Principles”
Overall, the world fertilizer industry will continue to face a supply-driven market and the structural imbalance between supply and demand may increase. IFA recommends that an effective approach to dealing with the growing imbalance between supply and demand and environmental regulation in the fertilizer industry is to continue promoting the “4R Principles” of fertilization worldwide, namely: the right time, the right place, the right fertilizer and the right application.
In addition, under such circumstances, fertilizer producers should actively seek new uses of their products, diversify their products and provide new services (agronomic advice, etc.) in order to further their business development while further promoting the integration among enterprises. For example, with the completion of the merger of North American potash giant Agrium and PotashCorp in the fourth quarter of 2017, the newly formed combined company Nutrien becomes the largest crop nutrition producer in the world.