OUTLOOK FOR PHOSPHATES Michael Mew October 24
23/4 Major Factors Rising phosphate fertilizer demand in several key overseas markets Supply constrained by capacity limitations overseas and by recent hurricane activity in the U.S. Higher selling prices for phosphate products High freight costs Rising oil prices Higher U.S. gas prices supporting high international ammonia prices Rising Sulphur prices followed by a recent softening again
U.S. $ P.M.T. FOB TAMPA 24 23 22 21 2 19 18 17 16 15 14 13 July WEEKLY U.S. DAP EXPORT PRICES 21/2 22/3 23/4 24/5 June
U.S. $ P.M.T. 7 WEEKLY U.S. DAP EXPORT MARGINS 6 5 4 3 2 1 July 21/2 22/3 23/4 24/5
25 $ PER M.T. FOB TAMPA ANNUAL U.S. DAP PRICES 2 15 1 5 199/91 1992/93 1994/95 1996/97 1998/99 2/1 22/3 Q1
9 8 7 6 5 4 3 2 1 $ PER M.T. ANNUAL U.S. DAP CASH MARGINS BASIS: LOW COST PRODUCER 199/91 1992/93 1994/95 1996/97 1998/99 2/1 22/3 Q1
$ per m.t. of DAP 4 35 3 SULPHUR COST IN DAP U.S. has $11 Advantage U.S. Price 25 2 15 1 Moroccan Price Morocco has $13 Adavantage 95 96 97 98 99 1 2 3 4
8 7 $ PER M.T. U.S. Morocco AMMONIA COSTS IN DAP 6 5 4 3 2 98 99 1 2 3 4
$ P.M.T. OF DAP 15 14 13 12 11 1 9 8 7 6 5 4 3 2 1 STATE OF THE MARKET U.S. DAP PRICE MINUS RAW MATERIAL COSTS BASIS: Low Cost Producer 91 92 93 94 95 96 97 98 99 1 2 3 4
' M.T. P2O5 4 PHOSPHATE FERTILIZER DEMAND 35 3 25 2 15 1 5 6 65 7 75 8 85 9 95
' M.T. P2O5 5 45 4 35 3 25 2 15 1 5 PHOSPHATE FERTILIZER DEMAND High Analysis Low Analysis World minus FSU & C Eur 8 85 9 95 5 1 15 (F)
2 15 NET PHOSPHATE DEMAND ADDITIONS Thousand m.t.p.a. P2O5 (F) 1 5-5 -1-15 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
Thousand m.t. 18 PHOSPHATE PRODUCT TRADE 16 14 12 1 8 6 4 2 9 91 92 93 94 95 96 97 98 99 1 2 3
Thousand m.t. 18 DAP IMPORTS 16 14 12 1 8 6 4 2 9 91 92 93 94 95 96 97 98 99 1 2 3 others Australia India China
5 45 4 PHOSPHORIC ACID PRODUCTION IN CHINA Thousand m.t. P2O5 35 3 25 2 15 1 5 9 91 92 93 94 95 96 97 98 99 1 2 3 4(F)
6 Thousand m.t. NET DAP IMPORT TRADE INTO CHINA 5 4 3 2 1 9 91 92 93 94 95 96 97 98 99 1 2 3 4(F)
China: Future Questions What will be the main drivers of phosphate fertilizer demand in China in coming years? Will the economics of production and transportation to the demand centres in the northeast allow China to become selfsufficient in DAP? How do the economics of production and export stack up against U.S. supply economics to regional markets? Will the phosphate rock reserve base be of sufficient quantity/quality to support the phenomenal growth in the industry?
7 6 5 4 3 2 1 TONNES PER HECTARE Europe USA China INDIA TOTAL CEREAL YIELDS 65 7 75 8 85 9 95
3 DAP PRICE INDEX TO INDIAN FARMERS 1991 = 1. 2.5 2 1.5 1.5 Cost of DAP in Rupees Cost of DAP in Terms of Rice Paddy Value 91 92 93 94 95 96 97 98 99 1 2
5 45 4 35 3 25 2 15 1 5 INDIAN DAP SUBSIDIES Rupees per m.t. of DAP Rock/Acid Sectors DAP Imports 91 92 93 94 95 96 97 98 99 1 2 3 4
Thousand m.t. DAP SUPPLY TO INDIA 9 8 7 6 Imports Production 5 4 3 2 1 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1
7 6 5 Thousand m.t. LATIN AMERICA: DAP/MAP/TSP IMPORTS TSP MAP DAP 4 3 2 1 9 91 92 93 94 95 96 97 98 99 1 2 3 4(F)
35 Thousand m.t. LATIN AMERICA: MAP IMPORTS 3 25 2 others Chile Argentina Brazil 15 1 5 9 91 92 93 94 95 96 97 98 99 1 2 3 4 (F)
16 14 THOUSAND M.T. U.S. MAP PRODUCTION Production MAP SHARE OF MAP/DAP PERCENT SHARE 4 35 12 3 1 25 8 2 6 15 4 1 2 5 94 95 96 97 98 99 1 2 3 4
Thousand m.t. 7 6 U.S. DAP/MAP SHIPMENTS China Latin America 5 4 3 2 1 1999 2 21 22 23 24 (F)
' M.T. 6 5 4 U.S. DOMESTIC DAP SHIPMENTS Fertilizer Year Basis Fall Spring (F) 3 2 1 93/94 94/95 95/96 96/97 97/98 98/99 99/ /1 1/2 2/3 3/4 4/5
Prodn: Bill. Bu 14 12 U.S. CORN DATA October USDA forecast September USDA forecast Mill Acres Bu/Acre (F) 18 16 1 14 12 8 1 6 8 4 2 Production Acreage Yield 93/94 94/95 95/96 96/97 97/98 98/99 99/ /1 1/2 2/3 3/4 4/5 4/5 6 4 2
2 Thousand m.t CHANGES TO MAP/DAP IMPORT DEMAND 15 1 5 (F) -5-1 -15-2 -25 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
45 4 35 3 25 2 15 1 5 Thousand m.t FSU MAP/DAP EXPORTS (F) 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
5 Thousand m.t NORTH AFRICAN MAP/DAP EXPORTS 45 4 35 (F) 3 25 2 15 1 5 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
3 Thousand m.t MIDDLE EAST MAP/DAP EXPORTS 25 (F) 2 15 1 5 9 91 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
U.S. MAP/DAP EXPORTS AND MARKET SHARE ' M.T. PERCENT 14 9 12 1 8 6 4 2 8 7 6 5 4 8 85 9 95 3
U.S. MAP/DAP EXPORTS AND MARKET SHARE ' M.T. PERCENT 14 9 12 1 8 6 4 2 8 85 9 95 5 1 8 7 6 5 4 3
U.S. DAP/MAP CAPACITY USE FORECASTS MILLION M.T. / PERCENT 1 95 9 (F) 85 8 75 7 65 6 Effective Capacity Use* Calculated Capacity Use 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12
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