NEW ORLEANS (DTN) -- The global outlook for phosphate fertilizer appears to be well-balanced into the coming years, according to the presenter for the phosphorus (P) outlook at the 2017 Fertilizer Outlook and Technology Conference held in mid-November in New Orleans.
Juan von Gernet, head of marketing in Europe for PhosAgro, said world P demand is on the rise with certain regions leading the way. At the same time, some countries are cutting P production and consumption, including the U.S.
WORLD P DEMAND TO GROW
Global P demand is forecast to grow by 3.0 million metric tons (mmt) by 2022 with higher consumption in Latin America, southeastern Asia and Africa, said von Gernet. This should help bring balance to the market, following the large amounts of capacity added in recent years.
The global demand for P has grown over the last seven years, he said. In 2010, the world used 43.1 mmt of the nutrient, while by 2013 that rose to 45.8 mmt. The forecast for 2017, meanwhile, is 49.5 mmt.
The demand growth for P is occurring in various regions of the world, von Gernet reported.
Russia's P demand was 1.2 mmt in 2014 and 2015, increased in 2016 to 1.7 mmt, and is expected to hold at that amount in 2017. However, it is projected to jump by 6% next year.
Strong fundamentals remain in place in Russia that would explain why P demand is on the rise, von Gernet said. These factors include restricted food imports, increased agricultural subsidies and the positive gains for the Russian ruble versus the U.S. dollar.
A surprising development in the increasing global P demand is large increases in Africa, he said, with 27 of its countries showing more than 5% demand growth this year, von Gernet said. "That was something I would have never expected."
Another region seeing robust growth in P demand is Latin America. The area has much possibility for future growth potential, he noted.
Central and South America utilized 8.0 mmt of P fertilizers in 2016. Usage is forecast to increase in 2017 to around 8.8 mmt, an 8.9% growth year-over-year, he said.
The reason for Latin America's increasing P demand is higher local prices for soybeans are encouraging farmers to use more fertilizer that remains affordable for them, von Gernet explained.
U.S. CUTTING P PRODUCTION
Still, a global balance of P fertilizer is possible because some regions of the world are cutting back in both production and use, von Gernet said.
For example, the U.S. has cut P production in recent years. In 2005, the U.S. produced 12 mmt of P. By 2010, production had fallen to 9.5 mmt and the estimated production in 2018 should be around 7.5 mmt, he said.
The reason for the falling U.S. P production is because companies have invested very little money in new mines in the country and have been utilizing reserves for production. Also, some P production in the U.S. was taken offline in 2017 due to hurricane damage, he added.
In addition to decreasing U.S. P production, China has seen a drop in total P use, von Gernet said.
There has been some debate on whether P demand has fallen because of the removal of a key corn subsidy in October 2015 in China. The corn price has declined 23% since the subsidy was removed, he said.
"Chinese farmers are being more price-conscious with the lower corn price there," he said.
As a result, Chinese P production has declined over the last couple of years, von Gernet said. DAP/MAP production in 2015 was 29.7 mmt, dropping to 27.1 mmt in 2016. Production in 2017 is estimated to be closer to 25.9 mmt.
At the same time, Chinese DAP/MAP fertilizer exports are on the rise, he said. In 2016, 33% of the P produced was exported, with 37% of the nutrients produced in 2017 expected to be exported.
INDIAN P INCREASING
One interesting development in the global P market is the concentrated effort to increase P manufacturing in India, according to von Gernet. The Indian government is pushing hard for more local Indian P production to reduce their reliance on imports.
The country consumed 7.2 mmt of P in both 2015 and 2016, and is forecast to produce 7.1 mmt in 2017, he said. In 2015, India produced about 59% of the P consumed. By 2016, this jumped to 67%, and in 2017 it's expected to be 71%.
Looking at the medium-term outlook for the P market, new P supply is expected to come online, according to von Gernet.
Expansions are planned, totaling 13 mmt proposed in 22 countries around the world through 2022, he said. However, only 10%, or about 1.3 mmt, are considered to be firm projects, which is encouraging for the medium-term market balance.
"I think, overall, the market's medium-term outlook is fairly positive," von Gernet said.
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