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Q1 2013MarketAnalysisReportMarch 20, 2013   PotashCorp.com
Forward-looking StatementsThis presentation contains forward-looking statements or forward-looking information (forward-lo...
Presentation Overview• Agriculture and Fertilizer Market Update• Global Potash Supply Overview• Global Phosphate Supply Ov...
Agriculture and FertilizerMarket Update
World Grain and Oilseed Supply/DemandNeed for Historically Large Production Increase to Avoid Additional Shortfall        ...
US Corn Use and Ending StocksSupply Shortfall Has Resulted in Significant Demand Rationing                 Use – Billion B...
US Corn YieldRecent Yields Have Fallen Well Below Preliminary USDA Projections       Bushels/Acre  Source: USDA
Soybean Market SituationReduced Production and Strong Chinese Demand Expected to Keep Supply TightUS S&D                  ...
South American Crop ProductionWorld Is Counting on a Large Production Response From South AmericaSoybeans                 ...
North American Planted Acreage ForecastExpect Large Planted Acreage of Major Fertilizer-Consuming CropsUS Major Crop Acrea...
North American Farm IncomeStrong Crop Prices Support a Healthy Farm EconomyUS Net Cash Farm Income                        ...
North American Crop PricesPrices Remain Well Above Historical Levels                Price Index (10-Year Average = 100)  S...
US Corn and Retail Fertilizer PricesFertilizer Prices Lag Behind Increases in Crop Prices                Price Index (Janu...
US Corn Plant Populations and Potash UseApplication Rates Have Not Kept Pace With Nutrient Removal                Average ...
Incremental Economic Return to Potash Fertilization          Strong Projected Returns on Soils Testing Below the Critical ...
World Potash Shipments and ConsumptionSignificant Global Distributor Inventory Destocking Occurred in 2012                ...
North American Potash Market UpdateAnticipate Strong Spring Demand to Meet Projected Consumption                Million To...
Brazil Potash Deliveries to Final ConsumerSupportive Agriculture Fundamentals Drove Record Potash Consumption             ...
World Potash ShipmentsExpect Significant Rebound in Global Demand                 Million Tonnes KCl                      ...
US Phosphate DemandSpring Demand Expected to Be Strong                 Producer Shipments - Million Tons DAP/MAP  Source: ...
World DAP and MAP TradeTrade Expected to be Relatively Flat in 2013World DAP/MAP Exports                      World DAP/MA...
2012 Ammonia Production ChangesCurtailments in the FSU, Egypt and Trinidad Tightened Global Market                 Yr/Yr C...
World Urea TradeChina Remained a Wild Card in the Global Urea MarketWorld Urea Exports                      World Urea Imp...
Global Potash SupplyOverview
Regional Analysis of Potash DevelopmentsMost Regions Have Limited Resources and Political Instability  Source: CRU
Saskatchewan Brownfield and Greenfield Potash CostsLeveraging Our Brownfield Expansion Advantage               Capital Cos...
World Potash Producer ProfileMajority of the Capacity Increases Are Expected From Existing Producers                 Milli...
Global Greenfield Potash ProjectsMultiple Potash Projects Are Under Review But Very Few Under ConstructionNumber of Explor...
World Potash Supply and DemandLimited Greenfield Capacity Operational by 2017; Demand Rebound Is Biggest Factor           ...
Global PhosphateSupply Overview
Global Phosphate Rock Capacity AdditionsMost New Capacity Occurring With Existing Producers Cumulative Capacity Additions ...
New Global Phosphoric Acid Capacity*Majority of Capacity Being Developed in Saudi Arabia and Morocco                Millio...
World Phosphoric Acid Supply and DemandExpect Relatively Balanced Market in the Medium Term                Product - Milli...
North AmericanNitrogen SupplyOverview
Major North American Fertilizer Production LocationsNumerous Nitrogen Capacity Announcements                              ...
North America Ammonia ProfileMajority of New Ammonia Production Expected to be Consumed by Downstream Products            ...
North America Urea ProfileUrea Imports Expected to Shrink With New Capacity Start-ups                Million Short Tons   ...
Ammonia Delivered Cost to US GulfExpect Production Will Be Required From Higher-Cost Offshore Suppliers   US$/Tonne       ...
Thank youThere’s more online:    PotashCorp.com    Visit us online    Facebook.com/PotashCorp    Find us on Facebook    Tw...
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PotashCorp - Market Analysis Report - Q1 2013

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PotashCorp - Market Analysis Report - Q1 2013

  1. 1. Q1 2013MarketAnalysisReportMarch 20, 2013 PotashCorp.com
  2. 2. Forward-looking StatementsThis presentation contains forward-looking statements or forward-looking information (forward-looking statements).These statements can be identified by expressions of belief, expectation or intention, as well as those statements thatare not historical fact. These statements are based on certain factors and assumptions including with respect to foreignexchange rates, expected growth, results of operations, performance, business prospects and opportunities andeffective tax rates. While the company considers these factors and assumptions to be reasonable based on informationcurrently available, they may prove to be incorrect. Several factors could cause actual results or events to differmaterially from those expressed in the forward-looking statements, including, but not limited to: variations from ourassumptions with respect to foreign exchange rates, expected growth, results of operations, performance, businessprospects and opportunities, and effective tax rates; fluctuations in supply and demand in the fertilizer, sulfur,transportation and petrochemical markets; costs and availability of transportation and distribution for our raw materialsand products, including railcars and ocean freight; changes in competitive pressures, including pricing pressures;adverse or uncertain economic conditions and changes in credit and financial markets; the results of sales contractnegotiations within major markets; economic and political uncertainty around the world; timing and impact of capitalexpenditures; risks associated with natural gas and other hedging activities; changes in capital markets; unexpected oradverse weather conditions; changes in currency and exchange rates; unexpected geological or environmentalconditions, including water inflows; imprecision in reserve estimates; adverse developments in new and pending legalproceedings or government investigations; acquisitions we may undertake; strikes or other forms of work stoppage orslowdowns; rates of return on and the risks associated with our investments; changes in, and the effects of, governmentpolicies and regulations; security risks related to our information technology systems; and earnings, exchange rates andthe decisions of taxing authorities, all of which could affect our effective tax rates. Additional risks and uncertainties canbe found in our Form 10-K for the fiscal year ended December 31, 2012 under the captions “Forward-LookingStatements” and “Item 1A – Risk Factors” and in our other filings with the US Securities and Exchange Commission andthe Canadian provincial securities commissions. Forward-looking statements are given only as at the date of thispresentation and the company disclaims any obligation to update or revise any forward-looking statements, whether as aresult of new information, future events or otherwise, except as required by law.
  3. 3. Presentation Overview• Agriculture and Fertilizer Market Update• Global Potash Supply Overview• Global Phosphate Supply Overview• North American Nitrogen Supply Overview
  4. 4. Agriculture and FertilizerMarket Update
  5. 5. World Grain and Oilseed Supply/DemandNeed for Historically Large Production Increase to Avoid Additional Shortfall Million Tonnes 2013 Production Growth Rate Scenarios 6% (~ 3X Historical Growth Rate) 4% (~ 2X Historical Growth Rate) 2013F refers to the 2013/14 crop year. Consumption forecast based on historical trend line growth. Source: USDA, PotashCorp
  6. 6. US Corn Use and Ending StocksSupply Shortfall Has Resulted in Significant Demand Rationing Use – Billion Bushels Stocks – Billion Bushels 2012F refers to the 2012/13 crop year. Source: USDA
  7. 7. US Corn YieldRecent Yields Have Fallen Well Below Preliminary USDA Projections Bushels/Acre Source: USDA
  8. 8. Soybean Market SituationReduced Production and Strong Chinese Demand Expected to Keep Supply TightUS S&D China Imports Use – Billion Bushels Stocks-to-Use Ratio Million Tonnes 2012F refers to the 2012/13 crop year. Source: USDA
  9. 9. South American Crop ProductionWorld Is Counting on a Large Production Response From South AmericaSoybeans Corn Million Tonnes Million Tonnes 2012F refers to the 2012/13 crop year. Source: USDA
  10. 10. North American Planted Acreage ForecastExpect Large Planted Acreage of Major Fertilizer-Consuming CropsUS Major Crop Acreage Canadian Major Crop Acreage Million Acres Million Acres Source: USDA, Doane, Statistics Canada, Agriculture Canada, Kostal Ag, PotashCorp
  11. 11. North American Farm IncomeStrong Crop Prices Support a Healthy Farm EconomyUS Net Cash Farm Income Canadian Net Farm Income Billion US$ Billion CDN$ Source: USDA, Statistics Canada, AAFC, PotashCorp
  12. 12. North American Crop PricesPrices Remain Well Above Historical Levels Price Index (10-Year Average = 100) Source: Bloomberg
  13. 13. US Corn and Retail Fertilizer PricesFertilizer Prices Lag Behind Increases in Crop Prices Price Index (January 2011 = 100) Source: DTN, Bloomberg
  14. 14. US Corn Plant Populations and Potash UseApplication Rates Have Not Kept Pace With Nutrient Removal Average Plant Population per Acre Application Rate* – lbs per Acre * Based on USDA application rate multiplied by percentage of acres applied Source: USDA, PotashCorp
  15. 15. Incremental Economic Return to Potash Fertilization Strong Projected Returns on Soils Testing Below the Critical Level Incremental Economic Return – US$/AcreSoybean Return Variables Av. Yield Rate Retail K Soybean Price – US$/bushelSoil Test lbs of Response PriceK (PPM) K20/acre bu/acre* $/st 90-130 6 90 $550 *Based on soybean yield response data from Iowa <90 8 120 $550 Source: Iowa State (Mallarino, 2008), PotashCorp
  16. 16. World Potash Shipments and ConsumptionSignificant Global Distributor Inventory Destocking Occurred in 2012 Million Tonnes KCl Distributor inventory estimated to be ~3 million tonnes lower at the end of 2012 Source: Fertecon, IFA, PotashCorp
  17. 17. North American Potash Market UpdateAnticipate Strong Spring Demand to Meet Projected Consumption Million Tonnes KCl Source: IPNI, USDOC, AAPFCO, PotashCorp
  18. 18. Brazil Potash Deliveries to Final ConsumerSupportive Agriculture Fundamentals Drove Record Potash Consumption Cumulative Deliveries - Million Tonnes KCl Equivalent Source: ANDA, PotashCorp
  19. 19. World Potash ShipmentsExpect Significant Rebound in Global Demand Million Tonnes KCl 2013 forecast bridge by key market Source: Fertecon, CRU, Industry Publications, PotashCorp
  20. 20. US Phosphate DemandSpring Demand Expected to Be Strong Producer Shipments - Million Tons DAP/MAP Source: TFI, PotashCorp
  21. 21. World DAP and MAP TradeTrade Expected to be Relatively Flat in 2013World DAP/MAP Exports World DAP/MAP Imports Million Tonnes Million Tonnes Source: Fertecon, PotashCorp
  22. 22. 2012 Ammonia Production ChangesCurtailments in the FSU, Egypt and Trinidad Tightened Global Market Yr/Yr Change - Thousand Tonnes China increased production by 3.3 million MT which is mostly consumed domestically. * Excluding Trinidad Source: IFA
  23. 23. World Urea TradeChina Remained a Wild Card in the Global Urea MarketWorld Urea Exports World Urea Imports Million Tonnes Million Tonnes Source: Fertecon, PotashCorp
  24. 24. Global Potash SupplyOverview
  25. 25. Regional Analysis of Potash DevelopmentsMost Regions Have Limited Resources and Political Instability Source: CRU
  26. 26. Saskatchewan Brownfield and Greenfield Potash CostsLeveraging Our Brownfield Expansion Advantage Capital Cost per Tonne – (CDN$) * New Brunswick cost per tonne based on new 2MMT mine (net addition totals 1.2MMT). ** Based on 2MMT conventional greenfield mine constructed in Saskatchewan. PotashCorp project costs exclude infrastructure outside the plant gate. Assuming US$/CDN$ exchange rate at par. Source: AMEC, Public Filings, PotashCorp
  27. 27. World Potash Producer ProfileMajority of the Capacity Increases Are Expected From Existing Producers Million Tonnes KCl – 2013-2017F PotashCorp * PotashCorp investments: ICL (14%), APC (28%), SQM (32%) and Sinofert (22%) Note: PotashCorp based on operational capability (estimated annual achievable production) while competitor capacity is stated nameplate, which may exceed operational capability Source: Fertecon, CRU, IFA, PotashCorp
  28. 28. Global Greenfield Potash ProjectsMultiple Potash Projects Are Under Review But Very Few Under ConstructionNumber of Exploration/Development Projects by Region Number of Approved Greenfield Potash Projects Under Construction Source: Fertecon, CRU, Public Filings, PotashCorp
  29. 29. World Potash Supply and DemandLimited Greenfield Capacity Operational by 2017; Demand Rebound Is Biggest Factor Million Tonnes KCl Operating Rate* - Percent * Based on percentage of operational capability (estimated annual achievable production level). Shipment range based on ~3% annualized demand growth rate (2002-2017). Operating rate forecast based on mid-point of shipment range divided by operational capability (including announced projects; assuming typical ramp-up period for new capacity). Source: Fertecon, CRU, IFA, PotashCorp
  30. 30. Global PhosphateSupply Overview
  31. 31. Global Phosphate Rock Capacity AdditionsMost New Capacity Occurring With Existing Producers Cumulative Capacity Additions - Million Tonnes Source: CRU, Fertecon, PotashCorp
  32. 32. New Global Phosphoric Acid Capacity*Majority of Capacity Being Developed in Saudi Arabia and Morocco Million Tonnes P2O5 *Capacity includes several projects classified by sources as uncertain, and excludes projects classified as unlikely Source: CRU, Fertecon, PotashCorp
  33. 33. World Phosphoric Acid Supply and DemandExpect Relatively Balanced Market in the Medium Term Product - Million Tonnes P2O5 Operating Rate – Percent Source: CRU, Fertecon, PotashCorp
  34. 34. North AmericanNitrogen SupplyOverview
  35. 35. Major North American Fertilizer Production LocationsNumerous Nitrogen Capacity Announcements - Existing N Complex - High Probability N Projects - Medium Probability N Projects - More Speculative N Projects Source: Blue, Johnson & Associates; Industry Publications, PotashCorp
  36. 36. North America Ammonia ProfileMajority of New Ammonia Production Expected to be Consumed by Downstream Products Million Short Tons Scenario 1 – assumes all high probability projects are completed by 2018 Scenario 2 – assumes all high and medium probability projects are completed by 2018 Scenario 3 – assumes all high, medium and a few speculative projects are completed by 2018 Scenarios based on PotashCorp assessment of announced project probabilities and potential product mix. Source: CRU, Fertecon, Blue Johnson & Associates, Public Filings, PotashCorp
  37. 37. North America Urea ProfileUrea Imports Expected to Shrink With New Capacity Start-ups Million Short Tons Scenario 1 – assumes all high probability projects are completed by 2018 Scenario 2 – assumes all high and medium probability projects are completed by 2018 Scenario 3 – assumes all high, medium and a few speculative projects are completed by 2018 Scenarios based on PotashCorp assessment of announced project probabilities and potential product mix. Source: CRU, Fertecon, Blue Johnson & Associates, Public Filings, PotashCorp
  38. 38. Ammonia Delivered Cost to US GulfExpect Production Will Be Required From Higher-Cost Offshore Suppliers US$/Tonne Note: Cost of production estimates based on natural gas price forecast range for 2017 Source: Fertecon, PotashCorp
  39. 39. Thank youThere’s more online: PotashCorp.com Visit us online Facebook.com/PotashCorp Find us on Facebook Twitter.com/PotashCorp Follow us on Twitter

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