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CMD 2012: Fertilizer Market Attractiveness (Dag Tore Mo)
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CMD 2012: Fertilizer Market Attractiveness (Dag Tore Mo)

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Presentation on Yara's Capital Markets Day, December 4, 2012, held by Head of Market Intelligence Dag Tore Mo

Presentation on Yara's Capital Markets Day, December 4, 2012, held by Head of Market Intelligence Dag Tore Mo

Published in Investor Relations
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  • 1. Fertilizer market attractiveness Dag Tore Mo, Head of Market Intelligence
  • 2. 1A third year of lower grain stocks Grain production and consumption Days of consumption in stocksMillion tons Days2 350 852 300 802 250 752 2002 150 702 100 652 050 602 0001 950 55 06 07 08 09 10 11E 12F 13F 06 07 08 09 10 11E 12F 13F Consumption ProductionSource: USDA, November 2012 Capital Markets Day 2012 – 4 December
  • 3. 2Main agricultural commodityprices at historic high levels FAO price indexIndex 300 250 200 150 100 50 0 1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012 Cereals Price Index Food Price Index Annual average Food price indexSource: FAO, November 2012 Capital Markets Day 2012 – 4 December
  • 4. 3Relationship between wheat and urea prices 900 800 May-Sep 08 700Urea fob Black Sea 600 Apr-May 12 500 400 Feb-Mar 08 300 Oct 12 200 100 100 150 200 250 300 350 400 450 500 Wheat fob US Gulf Capital Markets Day 2012 – 4 December
  • 5. 4Main fertilizer commodity prices USD/mt 900 800 700 600 500 400 300 200 100 0 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Urea fob Black Sea DAP fob Tampa MOP fob VancouverSource: International publications Capital Markets Day 2012 – 4 December
  • 6. 5Upgrading margins from ammonia to urea USD/t 800 700 600 500 400 300 200 100 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Urea fob Black Sea 0.6 * Amm + 15Source: Average of international publications Capital Markets Day 2012 – 4 December
  • 7. 6Above trend growth for nitrogenoutside China in 2011 Million tons N 100 95 90 85 80 75 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Trend growth from 2001 to 2011 of 2.1% per yearSource: IFA Capital Markets Day 2012 – 4 December
  • 8. 7…of which a major part has comefrom high cost regions Million tons N 4,000 833 -390 -1,165 3,000 584 2,703 High cost 198 503 2,000 392 985 1,000 763 0 Central Ukraine Turkey Russia North Africa West China Rest of Total Europe America Asia WorldSource: IFA Annual statistics Capital Markets Day 2012 – 4 December
  • 9. 8Nitrogen production outside China during1H2012 estimated 1.6% lower than last year 0 -100 -285 -200 Kilotons N -300 -116 -400 -500 -164 -545 -600 Russia Ukraine Egypt RoW TotalSource: IFA quarterly survey, covering 70-75% of global production Capital Markets Day 2012 – 4 December
  • 10. 9Chinese urea production gaining year on year Chinese urea production Domestic urea balanceMillion tons Million tons7,0 25 22,76,0 19,5 8% 19,2 20 17,8 3,55,0 1,7 154,03,0 102,0 51,00,0 0 Domestic Domestic Export Export Production Production Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2012 2010 2011Source: BOABC Jul-Oct 11/12 Jul-Oct 12/13 Capital Markets Day 2012 – 4 December
  • 11. 10More urea at lower prices exported from China Chinese urea exports Chinese export tax 1 Jul – 1 NovKilotons Fob China 8 000 700 2011 7 000 650 6 000 600 5 000 550 4 000 500 2012 3 000 450 2 000 400 1 000 350 0 300 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 1 750 1 950 2 150 2 350 2 550 2012 2008 2009 2010 2011 Domestic price ex works, RMB/tSource: BOABC Capital Markets Day 2012 – 4 December
  • 12. 11Lower feedstock cost and lowerdomestic urea price in China Anthracite coal prices, RMB/t Domestic urea price in China RMB/t 2 500 1,100 -25% 2 400 2 300 825 2 200 2 100 2 000 1 900 1 800 1 700 1 600 Nov 11 Nov 12 Jan Feb Mar Apr May Jun Jul AugSep Oct NovDec 2012 2011Source: China Fertlizer Market Week Capital Markets Day 2012 – 4 December
  • 13. 12Modest nitrogen production increasein China with urea gaining share +10% 44.6 40.7 41.8 41.3 40.2 40.0 9.6 8.7 9.1 10.3 10.2 Million tons N 6.7 6.1 5.6 7.5 6.2 +32% 25.5 25.2 26.6 22.9 23.8 2007 2008 2009 2010 2011 2012E Other ABC UreaSource: IFA, Chinese statistics Capital Markets Day 2012 – 4 December
  • 14. 13Projected nitrogen capacity additions outsideChina in line with historical consumption growth Urea capacity growth relative Year Driving regions to nitrogen capacity World Excluding China World Excluding China 2011 China 36% Pakistan 37% 1.2% (1.3%) 1.2% (1.3%) Pakistan 24% Iran 18% 2012 China 60% Qatar 34% 3.5% (4.1%) 2.2% (2.1%) Qatar 14% Vietnam 20% 2013 China 63% Algeria 38% 4.4% (2.7%) 2.6% (3.1%) Algeria 14% UAE 18% 2014 China 45% Egypt 25% 1.7% (1.0%) 1.5% (1.2%) Egypt 13% Algeria 16% 2015 China 42% Saudi Arabia 15% 2.6% (1.2%) 2.5% (1.9%) Saudi Arabia 9% Brazil 14% Gross annual addition 2011-2015 ~2.0% Assumed annual closures ~0.5% Net annual addition 2011-2015 ~1.5% Trend consumption growth from 2001 2.5% 2.1%Source: Fertecon urea update October 2012. Consumption data source is IFA. Previous update in brackets. Capital Markets Day 2012 – 4 December
  • 15. 14Continued project delays Additional urea capacityMillion tons8 7,57 Fertecon assumptions: 0,4 1 new site in Egypt from Jul 136 5,2 1,2 Startup in UAE in Jan 1354 2,5 Startups in Algeria in Jul 12, Jan 13 and Jul 13321 2,50 2012 2012 2013 Oct 11 est. Oct 12 est. Oct 12 est.Source: Fertecon urea updates Capital Markets Day 2012 – 4 December
  • 16. 15North America imports one third ofconsumption Million tons of N 7.1 19.8 4.5 1.8 12.7 Domestic production Imports Total consumption Ammonia Urea UANSource: IFA, USTIC Capital Markets Day 2012 – 4 December
  • 17. 16Global phosphate rock productionincreased by 3.8% in 2011 Mt Rock 200 180 160 140 Excluding China 120 100 80 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Trend growth from 2001 to 2011 of 2.1% per yearSource: IFA Capital Markets Day 2012 – 4 December
  • 18. 17Record Chinese phosphate exports in 2011Million tons P2O5 4,5 4,0 3,5 3,0 2,5 2,0 1,5 1,0 0,5 0,0 2005 2006 2007 2008 2009 2010 2011 DAP MAP TSP Other NPSource: IFA, BOABC for 2011. ( Assuming 25% P2O5 in “Other NP”, included from 2009 ) Capital Markets Day 2012 – 4 December
  • 19. 18India plays a major role in phosphate markets2011 DAP/MAP/TSP imports 2011 phos acid imports 2011 phos Rock imports 12 mt P2O5 4.5 mt P2O5 31.1 mt rock 24% 29% 46% 47% 55% 11% 65% USA 16% Brazil 7% Pakistan India OtherSource: IFA Capital Markets Day 2012 – 4 December
  • 20. 19Phosphate trade down 11% secondquarter 2012 2Q2012 compared to 2Q2011 -276 000’ tons of P2O5 -118 153 -181 102 160 -684 India Latin America RoW RoW West Asia USA China IMPORTS EXPORTSSource: IFA Quarterly Survey of World Trade, covering approx.95% of world trade (DAP, MAP, TSP and Phos.acid) Capital Markets Day 2012 – 4 December