World
fertilizer
trends
and
outlook
to
2018

FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS - Rome, 2015

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Table of Contents

List of Figures

List of Tables

PREFACE

EXECUTIVE SUMMARY

THE WORLD FERTILIZER OUTLOOK

BACKGROUND

Agricultural outlook

Input and output prices

DEMAND

Demand for fertilizer nutrients

Nitrogen (N)

Phosphate (P_2O_5)

Potash (K_2O)

Total demand for primary nutrients

SUPPLY

Nitrogen (N)

Phosphate (P_2O_5)

Potash (K_2O)

SUPPLY/DEMAND BALANCE

Nitrogen (N)

Phosphate (P_2O_5)

Potash (K_2O)

THE REGIONAL FERTILIZER SITUATION

Africa

North Africa

sub-Saharan Africa

Americas

North America

Latin America & Caribbean

Asia

West Asia

South Asia

East Asia

Europe

Central Europe

West Europe

East Europe and Central Asia

Oceania

ANNEXES

Annex 1

Annex 2

Annex 3

Annex 4

Annex 5

Annex 6

Annex 7

Annex 8

List of Figures

Figure 1. Annual Food Price Indices (2002-2004 = 100)

Figure 2. Global nutrients (N+P_2O_5+K_2O) consumption

Figure 3. Regional and subregional share of world increase/decrease in nitrogen fertilizer consumption, 2014-2018

Figure 4. Regional and subregional share of world increase in phosphate fertilizer consumption, 2014-2018

Figure 5. Regional and subregional share of world increase in potash fertilizer consumption, 2014-2018

Figure 6. Regional and subregional share of world increase in ammonia (as N) supply, 2014-2018

Figure 7. Regional and subregional share of world increase/decrease in phosphoric acid (as P_2O_5) supply, 2014-2018

Figure 8. Regional and subregional share of world increase/decrease in potash (as K_2O) supply, 2014-2018

Figure 9. Regional and subregional nutrient balances in 2018

List of Tables

Table 1. World Economic Outlook Projections (Percentage change)

Table 2. World production of major crops (million tonnes)

Table 3. Output prices, fertilizer price index, fertilizer and oil prices

Table 4. World demand for fertilizer nutrients, 2014-2018 (thousand tonnes)

Table 5. World and regional growth in fertilizer demand, 2014 to 2018

Table 6. World total demand for primary nutrients, 2014-2018 (thousand tonnes)

Table 7. World supply of ammonia, phosphoric acid and potash, 2014-2018 (thousand tonnes)

Table 8. World potential balance of nitrogen, phosphate and potash, 2014-2018 (thousand tonnes)

Table 9. Africa fertilizer forecast, 2014-2018 (thousand tonnes)

Table 10. The Americas fertilizer forecast, 2014-2018 (thousand tonnes)

Table 11. Asia fertilizer forecast, 2014-2018 (thousand tonnes)

Table 12. Europe fertilizer forecast, 2014-2018 (thousand tonnes)

Table 13. Oceania fertilizer forecast, 2014-2018 (thousand tonnes)

Table 14. Regional and subregional potential balance of nitrogen, phosphate (P_2O_5 based on H_3PO_4) and potash (K_2O), 2014-2018 (thousand tonnes)

Preface

This report presents the world nitrogen, phosphate and potassium fertilizer medium-term supply and demand projections for the period 2014-2018. The FAO/Fertilizer Organizations Working Group met in Nairobi, Kenya, in June 2014 to review the prospects for fertilizer demand and supply, and prepared the forecasts. The African Fertilizer and Agribusiness Partnership (AFAP) and the Fertilizer Association of Southern Africa (FERTASA) provided special regional contributions and presentations.

The Working Group comprised:

Fertilizers Europe (unable to attend)

FAI

Fertiliser Association of India

IFA

International Fertilizer Industry Association

IFDC

International Center for Soil Fertility and Agricultural Development

K+S

K+S KALI GmbH (participation by teleconference)

TFI

The Fertilizer Institute (unable to attend)

FAO

Food and Agriculture Organization of the United Nations

Annex 1 presents explanatory notes on potential supply, demand and balance. Annexes 2, 3, and 4 present world and regional fertilizer demand forecasts for nitrogen, phosphorus and potassium, respectively. Annexes 5, 6 and 7 present world and regional potential supply, demand and balances for the three primary nutrients. Nameplate capacity, operating rates and demand for fertilizers vary from year to year. Annex 8 provides the regional and subregional country groupings.

All references relating to fertilizers are in terms of three primary nutrients, viz., nitrogen (N), phosphate (P_2O_5) and potash (K_2O). The fertilizer demand and supply data refer to the calendar year.

FAO, in collaboration with experts from the Working Group dealing with fertilizer production, consumption and trade, annually provides five-year forecasts of world and regional fertilizer supply, demand and potential balance. The contributions made by the members of the Working Group and preparation of the FAO baseline data by Simona Mosco and Josef Schmidhuber from the FAO Statistics Division are gratefully acknowledged. The document was prepared by Robert Mayo, and his contribution is sincerely acknowledged. Final editing of the document was undertaken by John Choptiany. The document was prepared under the supervision of Caterina Batello, Senior Officer, FAO and overall direction by Clayton Campanhola, Director, Plant Production and Protection Division, FAO.

Executive summary

The world economy has broadly strengthened over the past three years and is expected to continue this strengthening during 2014-2015. The outlook for global grain supply-demand balance in the 2014/15 marketing season has improved further from what was previously thought earlier in 2014. The world cereal production in 2014 is estimated to reach 2 498 000 000 tonnes, or 2.2 percent below that of the record production in 2013. World food prices have continued to ease in 2014 and are down about 1.7 percent from July 2013. World fertilizer nutrient (N+P_2O_5+K_2O) consumption is estimated to reach 186 900 000 tonnes in 2014, up by 2.0 percent over 2013. World demand for total fertilizer nutrients is estimated to grow at 1.8 percent per annum from 2014 to 2018. The demand for nitrogen, phosphate, and potash is forecast to grow annually by 1.4, 2.2, and 2.6 percent, respectively, during the period. Over the next five years, the global capacity of fertilizer products, intermediates and raw materials will increase further.

The global potential nitrogen balance (i.e. the difference between N potentially available for fertilizers and N fertilizer demand) as a percentage of N fertilizer demand is expected to steadily rise during the forecast period, from 3.7 percent in 2014, to 5.4 percent in 2015, and then 6.9 percent in 2016, a further 8.8 percent in 2017 and reach 9.5 percent in 2018. The global potential balance of phosphorous is expected to rise from 2 700 000 tonnes in 2014 to 3 700 000 tonnes in 2018 or from 6.4 percent of total demand to 8.5 percent. The global potential balance of potassium is expected to rise significantly from 8 700 000 tonnes in 2014 to 12 700 000 tonnes in 2018, or from 25 percent of total demand to 33 percent.

The Africa region is likely to remain a major exporter of phosphate, followed by nitrogen, but would continue to depend solely on import of potash. North America would increase its supply of nitrogen fertilizer but continue to rely on imports. Its phosphate export may reduce slowly and the potash balance of the subregion is expected to increase. Latin America and Caribbean will continue its dependence on imported nitrogen, phosphate and potash during the forecast period. The dependence of East Asia on nitrogen imports is expected to continue, with the import of potash increasing during the period. The subregion would, however, continue to be a net exporter of phosphate during the period. West Asia has a surplus in all the three nutrients. It is a major contributor to the global nitrogen supply. The subregion has a small surplus of phosphate for exports, which is expected to grow in the forecast period. South Asia would continue to remain deficit in all the three nutrients with the deficit balance in all the three nutrients expected to rise during the forecast period. In Europe, the major contribution in the nitrogen, phosphate, and potash surplus is from East Europe and Central Asia. It has a large potential balance of nitrogen and potash. West Europe would continue to remain in surplus in potash and in deficit in nitrogen and phosphate. Central Europe would continue to be in deficit in phosphate and potash. The surplus balance of nitrogen in the subregion will marginally decline. Oceania region would continue to be in deficit in all the three nutrients.

BACKGROUND

The global economic growth and financial situation impacts various sectors, including agriculture. The world economy has experienced financial turmoil in 2008 followed by a slump in growth with intermittent recovery and most recently a broader strengthening, which is expected to continue during 2014-2015. The world fertilizer outlook, therefore, needs to be viewed from the perspective of the world economic growth situation. This report begins with a background of the world economic growth, followed by developments in agricultural production, input (fertilizer) output prices, and thereafter presents the details of regional and global supply, demand, and the potential balance of fertilizers in the coming years on a five year basis.

According to the World Economic Outlook report of the International Monetary Fund (IMF), the world economy has broadly strengthened and is expected to continue this strengthening during 2014-2015, with a major portion of the impetus for growth coming from advanced economies. The IMF sees that the downside risks have diminished overall, however lower than expected inflation poses risks for advanced economies. The increased financial volatility in emerging market economies, and increases in the cost of capital will likely dampen investment and diminish growth (IMF, July 2014). There remain fluctuations in the growth of emerging market economies.

The World Economic Outlook (IMF, July 2014) report indicates that global growth is projected to be 3.4 percent in 2014 with somewhat stronger growth expected in some advanced economies in 2015, a global growth of 4 percent in 2015 is expected. Growth in advanced economies is projected to increase by 1.8 percent in 2014 and 2.4 percent in 2015. Growth in emerging and developing economies may be around 4.6 percent in 2014 before increasing to 5.2 percent in 2015. Growth in the Euro area is expected to be around 1.1 percent, and an expected 1.5 percent in 2015. Growth is projected to remain around 2.8 percent in 2014 in regions connected more closely with the Euro area, particularly, central and eastern Europe. The United States may achieve a growth of 1.7 percent in 2014 and 3 percent in 2015. Growth in the East and North Africa will be higher in 2014 compared with last year. Similarly, growth in sub-Saharan Africa is expected to remain strong in 2014–15 (5.4 percent and 5.8 percent), supported by the region’s relative insulation from external financial shocks. Table 1 shows the world economic outlook projections in 2014 and 2015 compared with 2012 and 2013.

According to the IMF, global consumer price inflation is projected to remain subdued in 2014-15 as demand is expected to weaken, with falling commodity prices. In advanced economies, risks to activities associated with very low inflation have become important, especially in the Euro area, where large output gaps have contributed to low inflation. The IMF considers that there is the possibility of higher real interest rates, an increase in private and public debt burdens, and weaker demand and output.

Agricultural outlook

The World Food Situation, released by the Food and Agriculture Organization of the United Nations (FAO) in July 2014 forecasts an improved situation for global cereal supplies in the 2014/15 marketing season from what was previously thought. The world cereal production in 2014 is estimated to reach 2 498 000 000 tonnes, up by 18 000 000 tonnes, from the earlier estimate in June, but still 23 000 000 tonnes or 2.2 percent below that of the record production in 2013. The upward revision is mainly due to improved production prospects in coarse grains and wheat crops in the United States, the European Union and India.

Global wheat production is anticipated to reach 707 200 000 tonnes in 2014, a decrease of 9 700 000 tonnes (1.4 percent) compared with 2013, but still the second largest harvest ever. Most of the reduction in wheat production is accounted for in Canada, with smaller harvests expected in Australia, Morocco, the Syrian Arab Republic, the Russian Federation, Ukraine, and the United States. In contrast, a number of other major producing countries: Argentina; Brazil; India; Mexico, and Pakistan are likely to harvest more wheat.

World production of coarse grains (e.g. maize, barley, sorghum, millet, rye and oats) is projected at 1 287 300 000 tonnes in 2014, down 19 000 000 tonnes (or 1.5 percent) from 2013. The anticipated fall is mainly attributed to a smaller production in the United States.

The global rice production is estimated at 503 600 000 tonnes (milled basis) in 2014, up 1.2 percent from the 2013 level. This increase is despite less attractive prices for rice and a possible recurrence of an El Niño weather anomaly, which is likely to influence the production in Asia. Increases in production are expected in Africa and the Americas.

The global sugar production is estimated to surpass consumption for the fourth consecutive year, but the surplus is expected to be smaller than in previous years. The international price of sugar was on a downward trend for the later part of 2013 and has had a modest recovery in early 2014, mainly influenced by drought conditions in Brazil, the world’s second largest producer and exporter. Early indications for the 2014 season are that the world sugar market is likely to be more balanced, or even display a small deficit, as producers adjust to lower international sugar prices by reducing production.

World production of oilseed is expected to have reached an all time high in 2013. The growth rate of production of palm oil, however is expected to have a significant slowdown. With South America’s record soybean crop finally entering the market and a likely slowdown in China’s import demand, the global supply and demand situation for oilseed and meals should ease substantially in the coming months. The outlook for vegetable oil markets remains mixed. Table 2 presents the world production of major crops in recent years and forecast for 2014/2015.

Input and output prices

The Food Price Index of the FAO averaged 203.9 points in July 2014, which is down almost 1.7 percent from July 2013. The index of cereals averaged 185, declining 16.6 percent from the equivalent time in 2013. The index of diary averaged 226, declining 7.2 percent from the equivalent time in 2013. The index of meat averaged 205, increasing 14.2 percent from a year earlier. The index of vegetable oils averaged 181, declining 3 percent from a year earlier. The index of sugar averaged 259 in July 2014, an 8.4 percent increase from July 2013. The food price index started coming down from last quarter of 2011, where it had reached a peak of 229.9. Figure 1 shows the movement in annual food price indices from 2001 to July 2014.

With the easing of food prices, energy prices also eased since 2012. The average Brent crude price was US$111.9 per barrel in June 2014, and has been fluctuating around the US$105 per barrel level over the past three years. This period of moderate volatility follows fluctuations in 2012 where the oil price was at a peak price of US$124.9 per barrel in March 2012 and a low of US$95.6 per barrel in June 2012. High energy prices impact various cost segments, including fertilizer. The importance of natural gas (which accounts for about two-thirds of the production capacity of ammonia) should not be understated in relation to nitrogen fertilizer production. It is expected that almost all new ammonia projects will be based on natural gas in the near future. The rapid increase of shale gas production in the United States and subsequent availability is resulting in lower United States natural gas prices and this is expected to have an impact on the global fertilizer industry.

The World Bank Index of Fertilizer Prices (2010=100) forecasts a decline of almost 15 percent in 2014 and an additional 1.5 percent in 2015. During 2013, there was a 17 percent decline in the fertilizer price index. The specific forecast items of the Fertilizer Price Index in 2014 are: phosphate rock declining 26 percent, potash declining 21 percent, Urea declining 12 percent, TSP declining 6 percent, and DAP expected to remain stable (Source: Global Economic Prospects, Commodity Market Outlook, July 2014, World Bank). Table 3 shows further detailed fertilizer prices from 2010 to the first half of 2014.

DEMAND

Demand for fertilizer nutrients

In light of the above background and keeping in view the factors that will influence and likely impact in the future, the demand for fertilizer nutrients have been projected for the coming five years. Total fertilizer nutrient (N+P_2O_5+K_2O) consumption is estimated at 183 200 000 tonnes in 2013 and is forecast to reach 186 900 000 tonnes in 2014. With a successive growth of 1.8 percent per year, it is expected to reach 200 500 000 tonnes by the end of 2018. Figure 2 indicates the forecasts of world demand for total fertilizer nutrients from 2014 to 2018, against the actual consumption in the preceding six years.

The forecasts of demand for the three main plant nutrients in specific regions and the world for 2014 to 2018 are presented in Annexes 2, 3 and 4. The global demand for fertilizer nutrients are summarized in Table 4.

In 2014, the world demand for nitrogen, phosphate and potash is forecast to grow by 1.6, 2.3 and 3.3 percent, respectively, over the previous year. The world and regional annual growth rate in fertilizer demand between 2014 and 2018 is given in Table 5. The world demand for nitrogen, phosphate and potash is forecast to grow annually by 1.4, 2.2 and 2.6 percent, respectively, between 2014 and 2018.

Nitrogen (N)

The world nitrogen fertilizer demand increased from 111 400 000 tonnes in 2013 to 113 100 000 tonnes in 2014, at a growth rate of 1.5 percent. It is expected to be around 119 400 000 tonnes in 2018 at the annual growth of 1.4 percent. Of the overall increase in demand for 6 300 000 tonnes of nitrogen between 2014 and 2018, 58 percent would be in Asia, 22 percent in the Americas, 11 percent in Europe, 8 percent in Africa and 1 percent in Oceania.

Among the Asian countries, the bulk of the increase of world demand for nitrogen is expected to come from China (18 percent) and India (17 percent), followed by Indonesia (6 percent), Pakistan (4 percent), Bangladesh (2 percent), Vietnam (2 percent) and Malaysia and Thailand (1 percent each). In the Americas, the major share of the increase is expected to be in Latin America (18 percent), and will come mainly from Brazil, Argentina, Colombia and Mexico. In North America, the share of increase is expected to be around 5 percent, contributed largely by USA and Canada. In Europe, the major share of increase is expected in East Europe and Central Asia (9 percent), in Ukraine (5 percent) and Russia (3 percent). The share of increase in Central Europe is expected to be around 3 percent. In West Europe, there may be a nominal decline in consumption during the period. The share of increase in North Africa is expected to be around 2.5 percent, mainly in Egypt and Morocco. The share of increase in sub-Saharan Africa is expected to be around 5 percent, mainly in Nigeria, and Ethiopia. Figure 3 shows the regional and subregional share of world increase in nitrogen consumption between 2014 and 2018.

Phosphate (P_2O_5)

Phosphate fertilizer consumption/demand, includes H_3PO_4 (phosphoric acid) based fertilizer demand + non-H_3PO_4 fertilizer demand. The non-H_3PO_4 fertilizer demand includes P2O5 in single super phosphate, direct application phosphate rock (DAPR), nitric acid-based phosphate fertilizers, etc. The world phosphate fertilizer demand increased from 41 700 000 tonnes in 2013 to 42 700 000 tonnes in 2014, at a growth rate of 2.4 percent. It is expected to touch 46 600 000 tonnes in 2018 at a growth rate of 2.2 percent per year. Of the overall increase in demand for 3 900 000 tonnes P_2O_5 between 2014 and 2018, 58 percent would be in Asia, 29 percent in America, 9 percent in Europe, 4 percent in Africa and 0.5 percent in Oceania.

Among the Asian countries, about 27 percent of the growth in world demand of phosphate is expected in India, 10 percent in China, 5 percent in Indonesia, 3 percent in Pakistan and 2 percent in Bangladesh. West Asia accounts for 7 percent of the increase in consumption of which Iran has the majority of the share of the increase. Among the major countries in the Americas, 19 percent of the growth in world demand is projected to be in Brazil, 4 percent in Argentina and 2 percent in the USA. The share of East Europe and Central Asia is expected to be 6 percent, of which Russia accounts for a share of 2 percent and Ukraine approximately 2 percent. West Europe has a flat forecasted consumption level and Central Europe is expected to contribute 3 percent of the world increase in consumption. The share of increase in Oceania is expected to be 0.5 percent. In sub-Saharan Africa, the increase is likely to be 2 percent and in North Africa, it is also expected to be around 2 percent. Figure 4 shows regional and subregional shares of world increase in phosphate consumption between 2014 and 2018.

Potash (K_2O)

Potassium fertilizer demand is estimated to increase from 30 060 000 tonnes in 2013 to 31 040 000 tonnes in 2014, indicating an increase of 3.3 percent. The world potash fertilizer demand is expected to be 34 500 000 tonnes in 2018 with per annum growth of 2.6 percent over 2014. Of the overall increase in demand for 3 400 000 tonnes of potash between 2014 and 2018, 56 percent would be in Asia, 27 percent in the Americas, 11 percent in Europe, 6 percent in Africa and 0.4 percent in Oceania.

Among the Asian countries, about 23 percent of the growth in world demand for potash is expected in China, 17 percent in India, 7 percent in Indonesia, 2 percent in Malaysia and 1 percent for the remainder from the rest of Asia. In the Americas, the largest share of the growth of about 18 percent is projected to be in Brazil. In Europe, about 6 percent of the growth in world demand for potash is expected in East Europe and Central Asia: of which Russia accounts for 3 percent, and 2 percent in Ukraine. This is followed by 3 percent in Central Europe, with West Europe expected to increase by about 2 percent during the reference period. Figure 5 shows regional and subregional shares of world increase in potash consumption during 2014 to 2018.

Total demand for primary nutrients

The details of demand for primary nutrients for use as fertilizer have been discussed in the previous section. There is also some use of primary nutrients in industry. In addition, nitrogen and phosphate are used as feed for cattle, poultry, and fish. Table 6 shows the global total demand (fertilizer + non-fertilizer) for primary nutrients for 2014 to 2018.

Since the major share of phosphate fertilizers is based on phosphoric acid (H3PO4), and its supply and demand is of commercial importance, the following sections on supply and supply/demand balance are based on H_3PO_4 (i.e. excluding non-H_3PO_4 sources).

SUPPLY

The global total nutrient capacity[1] (N+P_2O_5+K_2O) was 278 000 000 tonnes in 2013, out of which the total supply[2] was 237 000 000 tonnes. During 2014, the total capacity is expected to increase by 2.3 percent and supply would grow by 2.6 percent. Over the next five years, global capacity and production of fertilizers would increase further. Table 7 shows world supply of ammonia (the main source of anthropogenic nitrogen for the manufacturing of N-based fertilizers), phosphoric acid and potassium during 2014 to 2018. Region and subregion wise detail information is given in Annexes 5, 6 and 7.

Nitrogen (N)

The world ammonia capacity was 173 700 000 tonnes (as N) in 2013. With the expected addition in capacity of about 4 700 000 tonnes, the total ammonia capacity is likely to be 178 400 000 tonnes (as N) in 2014. With successive additions in capacity each year, total ammonia capacity is expected to rise to 201 500 000 tonnes (as N) in 2018. The main additions to capacity would occur in East Asia, Africa, West Asia, East Europe and Central Asia, North America and Latin America. Of the total increase of 23 100 000 tonnes from 2014 to 2018, nearly 26 percent is expected to be added in East Asia, 19 percent in Africa, 17 percent in East Europe and Central Asia, 15 percent in North America, 9 percent in West Asia, 8 percent in Latin America and Caribbean, and 4 percent in South Asia.

After taking into account operating rates, world supply of ammonia (as N) is estimated at 149 000 000 tonnes in 2013, which would rise to 152 800 000 tonnes in 2014. From 2014 to 2018, there would be a total addition in supply of 23 700 000 tonnes. The total supply of ammonia (as N) would thereby rise to 176 500 000 tonnes in 2018 (Table 7).

Figure 6 shows the percentage contribution of various regions and subregions to the total increase in ammonia (as N) supply between 2014 and 2018.

According to the International Fertilizer Industry Association (IFA), about 41 000 000 tonnes of urea (product) capacity is expected to be added between 2013-2018. The major increases in capacity are expected in East Asia (15 000 000 tonnes), Africa (9 000 000 tonnes) and North America (5 000 000 tonnes). The expansion in capacity in North America is directly linked to the expansion of the shale gas industry.

Phosphate (P_2O_5)

World phosphoric acid (as P_2O_5) capacity was about 54 300 000 tonnes in 2013. A modest increase of 1 300 000 tonnes is expected in 2014 with the total rising to 55 600 000 tonnes. By 2018, it is expected to rise to 61 500 000 tonnes. Of the total 5 900 000 tonnes addition in world capacity between 2014 and 2018, 63 percent addition would take place in Asia, mainly in East Asia and West Asia. About 24 percent capacity would be added in Africa, 16 percent in Latin America and Caribbean, 3 percent in East Europe and Central Asia and. No addition in capacity is expected in Central Europe, West Europe and in North America and Oceania. There is expected to be a reduction of just under 7 percent capacity in North America between 2013 and 2015.

According to IFA, between 2013 and 2018, around 7 300 000 tonnes of new capacity for phosphoric acid units are planned for completion, of which 1 800 000 tonnes of new capacity would be located in Morocco, 1 500 000 tonnes of new capacity in Saudi Arabia and around 1 700 000 tonnes of new capacity in China.

After taking into account operating rates, world supply of phosphoric acid (as P_2O_5) is estimated at 45 400 000 tonnes in 2013, which is estimated to rise to 46 900 000 tonnes in 2014. A steady increase is expected annually, and by 2018, the total supply should be 52 200 000 tonnes (see Table 7). Figure 7 shows the percentage contribution of various regions and subregions to the total increase in phosphoric acid (as P2O5) supply between 2014 and 2018.

According to IFA about 20 new potash units are planned to come on stream in between 2013 and 2018. The major new potash capacity developments are planned in Belarus, Canada, China and Russia.

Potash (K_2O)

World potash capacity was estimated at 49 700 000 tonnes (as K2O) in 2013. An increase of 790 000 tonnes is expected in 2014 with the total rising to 50 500 000 tonnes. By 2018, the total capacity is likely to be 60 700 000 tonnes. Of the total increase in capacity of 10 200 000 tonnes potash between 2014 and 2018, 49 percent would be in North America, 39 percent in East Europe and Central Asia and about 13 percent in East Asia.

After considering operating rates, world supply of potash (as K_2O) is estimated at 42 600 000 tonnes in 2013, which would rise to 43 600 000 tonnes in 2014. A steady increase is expected annually from 2014, with the total supply possibly reaching 51 400 000 tonnes by 2018 (see Table 7). Figure 8 shows the percentage contribution of various regions and subregions to the total increase in potash supply between 2014 and 2018.

1 Capacity refers to nameplate capacity.

2 Supply refers to effective capacity. See Annex 1 for further details.

SUPPLY/DEMAND BALANCE

The world potential balance of nitrogen, phosphate (H_3PO_4 based P_2O_5), and potash (K_2O) for the years 2014 to 2018 is presented in Table 8. The potential balance is derived from maximum availability (supply) over the projected total demand as follows;

(i) Potential balance = supply–non-fertilizer demand–fertilizer demand;

(ii) Supply of each nutrient is referred as under:

N = N through ammonia,

P_2O_5 = P_2O_5 through phosphoric acid, and

K_2O = K_2O through potash.

Unforeseen factors, such as, feedstock/raw material limitations, logistic problems, unscheduled shut down due to technical reasons, natural calamities (earth quake, mine flooding, etc.) are not considered in the balance. Consumption/demand projections are based on agronomic considerations (e.g. cropped area and application rate of fertilizer), market feedback, estimates by industry associations, growth models; econometric models, expert advice, etc.

Nitrogen (N)

The world nitrogen supply is expected to increase by 3.7 percent annually between 2014 and 2018, whereas demand is projected to increase by 1.4 percent in the same period. The potential balance of nitrogen is expected to be 5 500 000 tonnes in 2014 as compared with 5 300 000 tonnes in the previous year. There would be an addition in the potential balance by about 2 600 000 tonnes in 2015 with an additional increase of 2 600 000 tonnes in 2016. An increase of over 3 000 000 tonnes is expected in 2017, followed by an increase of 1 400 000 tonnes 2018. The total potential balance would be around 15 300 000 tonnes by the end of 2018. The potential nitrogen balance as a percentage of global total demand is expected to increase from 3.7 percent in 2014 to 5.4 percent in 2015, 6.9 percent in 2016. By 2017, it is expected to be around 8.8 percent and rise to 9.5 percent by 2018 (see Table 8). Any shortfall in supply due to slippage in commissioning in some of the projects or surge in demand could well be absorbed from the potential balance.

Phosphate (P_2O_5)

The world phosphate (H_3PO_4 based P_2O_5) supply is expected to increase by 2.7 percent per annum between 2014 and 2018, whereas demand is projected to increase by 2.3 percent in the same period. The potential balance of phosphate is expected to rise from 2 700 000 tonnes in 2014 to 3 700 000 tonnes in 2018. The ratio of potential phosphate balance (H_3PO_4 based) to global phosphate demand (H_3PO_4 based P_2O_5) is likely to grow from about 6.4 percent in 2014 to 8.5 percent during the remaining period of the forecast period (see Table 8).

Potash (K_2O)

The world potash balance was 8 850 000 tonnes in 2013, which decreased to 8 700 000 tonnes in 2014. The demand for potash is projected to increase by 2.6 percent between 2014 and 2018. The world potash supply is expected to increase by 4.2 percent during the same period. The potential balance is expected to rise significantly from 8 700 000 tonnes in 2014 to 12 700 000 tonnes in 2018. The potential potash (K_2O) balance as a percentage of global total demand is expected to rise from 25 percent in 2014 to a high level of 33 percent in 2018 (see Table 8).

THE REGIONAL FERTILIZER SITUATION

Africa

Africa accounted for 3 percent of world fertilizer consumption in 2013. Its share in world consumption of nitrogen is 3.1 percent, phosphate 3.3 percent and potash 1.9 percent. The growth rate in demand for nitrogen, phosphate, and potash for fertilizer is expected to be 3.2, 2.7, and 7.8 percent, respectively, between 2014 and 2018. The fertilizer nutrient supply/demand balance indicates that the region would remain a major exporter of phosphate, followed by nitrogen. For potash, the region would continue to depend solely on import. Table 9 indicates fertilizer forecast for Africa for 2014 to 2018.

North Africa

The share of North Africa in world consumption of nitrogen is 1.7 percent, phosphate 1.4 percent and potash 0.5 percent. The growth rate in demand for nitrogen, phosphate and potash for fertilizer is expected to be 2.0, 3.2 and 2.8 percent, respectively, between 2014 and 2018. Egypt and Morocco have the major share of nitrogen consumption in North Africa.

sub-Saharan Africa

The share of sub-Saharan Africa in world consumption of nitrogen is 1.5 percent, phosphate 1.9 percent and potash 1.4 percent. The growth rate in demand for nitrogen, phosphate and potash for fertilizer is expected to be 4.6, 2.3 and 9.4 percent, respectively, between 2014 and 2018. South Africa, Nigeria, Kenya and Ethiopia are the major users of fertilizers in sub-Saharan Africa.

Americas

Total fertilizer nutrient consumption in the Americas is 24.2 percent, of which North America constitutes 12.9 percent and Latin America and Caribbean 11.3 percent. The share of the Americas in world consumption of nitrogen is 19.7 percent, phosphate 27.3 percent and potash 36.6 percent. The region would continue to remain in potash surplus, but deficit in nitrogen and phosphate during the forecast period. Table 10 presents fertilizer forecast for the America region for 2014 to 2018.

North America

The share of North America in world consumption of nitrogen is 12.8 percent, phosphate 11.6 percent and potash 15.5 percent. The growth rate in demand for nitrogen and phosphate is expected to be 0.5 percent and 0.4 percent for potash between 2014 and 2018. The United States and Canada are major users of fertilizer in the region. The fertilizer nutrient supply/demand balance indicates that while supply will increase in the subregion, there will continue to be a reliance on nitrogen fertilizer imports. The potash balance of the region is expected to increase due to addition of potash capacity mainly in Canada.

Latin America & Caribbean

The share of Latin America and Caribbean in world consumption of nitrogen is 7 percent, phosphate 15.7 percent, and potash 21 percent. The per annum growth in demand for nitrogen, phosphate and potash is expected to be at 3.3, 3.6 and 3.0 percent, respectively between 2014 and 2018. Brazil, Argentina, Mexico and Colombia constitute the major users of fertilizer in the region. The fertilizer nutrient supply/demand balance indicates that the region’s dependence on import of nitrogen, phosphate and potash will continue during the forecast period.

Asia

The Asia region is the largest consumer of fertilizer in the world. Total fertilizer nutrient consumption in Asia is 58.5 percent of the world total, the bulk of which is in East Asia and South Asia. The share of Asia in world consumption of nitrogen is 62.1 percent, phosphate 57.6 percent and potash 46.4 percent. The region’s dependence on imports of nitrogen and phosphate may reduce towards the end of the forecast period, but the region will still remain dependent on imports. The region would continue to remain in deficit with potash during the forecast period. Table 11 presents the fertilizer forecast for the Asia region for 2014 to 2018.

West Asia

The share of West Asia in world consumption of nitrogen is 2.8 percent, phosphate 2.5 percent and potash 0.8 percent. Total fertilizer consumption in West Asia is forecast to grow by 3.2 percent per year from 2014 to 2018, reflecting a progressive rebound of demand in countries facing geopolitical instability. The demand for nitrogen, phosphate and potash is expected to grow by 2.1, 6.3 and 4.0 percent, respectively, during the period. The subregion is in surplus in all the three nutrients. It is a major contributor to the global nitrogen supply and a growing supplier of phosphate products.

South Asia

Fertilizer consumption in South Asia has been increasing at a fast pace. It is the second largest fertilizer consuming region in the world. Its share in world consumption of nitrogen, phosphate and potash is 19.8, 18.4 and 9.1 percent, respectively. Nitrogen, phosphate, potash consumption is expected to grow at 1.7, 3.6 and 4.9 percent, respectively, per annum during 2014 to 2018. This outlook may be strongly influenced by the evolution of the fertilizer subsidy regimes in India. The deficit for the three nutrients will increase during the forecast period for the subregion.

East Asia

The East Asia subregion is the largest fertilizer producing and consuming region in the world. Any development in East Asia and South Asia in regard to fertilizer application affects the global demand/supply situation significantly. The share of East Asia in global consumption of total fertilizer nutrients is 38.4 percent. The share of the subregion in nitrogen consumption is 39.5 percent, phosphate 36.7 percent and potash 36.6 percent. Nitrogen, phosphate and potash consumption is expected to grow at 1.0, 1.2 and 2.6 percent, respectively, per annum during 2014 to 2018. There is expected to be growth in nitrogen capacity in the subregion, however increases in demand will keep the subregion dependent on imports. The potash supply in the region continues to be far lower than the demand. With the increasing demand for potash, import demand would grow significantly during the period. The subregion would, however, continue to be a net exporter of phosphate during the period.

Europe

The fertilizer forecasts for the Europe region as a whole are provided in Table 12. Europe’s share in global consumption of total fertilizer nutrients is about 12.5 percent. The share of the region in nitrogen fertilizer consumption is 13.5 percent, phosphate 9.0 percent and potash 14.0 percent. Nitrogen consumption is expected to increase by 1.1 percent, while phosphate and potash consumption are expected to grow in the region at 2.3 and 2.1 percent, respectively, per annum during 2014 to 2018.

The region has sufficient exportable surplus of nitrogen and potash while the potential balance of phosphate is very small. The potential balance of nitrogen is expected to increase from 12 500 000 tonnes in 2014 to 15 300 000 tonnes in 2018. The potential balance of phosphate may reduce from 452 000 tonnes in 2014 to 256 000 tonnes in 2018. The potential balance of potash is expected to rise consistently from 12 600 000 tonnes in 2014 to 14 900 000 tonnes in 2018.

Central Europe

The share of Central Europe in nitrogen consumption is 2.5 percent, phosphate 1.7 percent and potash 2.3 percent. Nitrogen, phosphate and potash consumption is expected to grow in the subregion at 1.7, 3.7 and 3.1 percent, respectively, per annum during 2014 to 2018. The subregion will continue to have an exportable surplus of nitrogen of about 1 800 000 to 1 900 000 tonnes during the forecast period. However, it will continue to depend on imports of phosphate and potash.

West Europe

The share of West Europe in nitrogen consumption is 7.3 percent, phosphate 4.5 percent and potash 7.2 percent. The consumption of nitrogen in the subregion is expected to decline marginally by 0.3 percent per annum during 2014 to 2018. The consumption of phosphate and potash is expected to grow in the subregion at 0.1 and 0.8 percent, respectively, per annum during 2014 to 2018. The subregion has an exportable surplus of potash of about 1 400 000 tonnes in 2014, which is expected to decline marginally by the end of the forecast period. However, it will continue to depend on imports of nitrogen and phosphate.

East Europe and Central Asia

The share of East Europe and Central Asia in nitrogen consumption is 3.7 percent, phosphate 2.9 percent and potash 4.5 percent. The consumption of nitrogen, phosphate and potash is expected to grow in the subregion at 3.3, 4.5 and 3.7 percent, respectively, per annum during 2014 to 2018. The subregion will continue to remain in surplus in all the three nutrients during the forecast period. The surplus of nitrogen may increase from about 13 900 000 tonnes in 2014 to 17 000 000 tonnes in 2018. Similarly, the surplus of potash is anticipated to rise from 12 000 000 tonnes in 2014 to 14 500 000 tonnes in 2018. The phosphate surplus in the subregion would remain at around 2 500 000 tonnes during the forecast period.

Oceania

The share of Oceania in world consumption of total fertilizer nutrients is only 1.7 percent. The share of the subregion in nitrogen consumption is 1.5 percent, phosphate 2.7 percent and potash 1.1 percent. Nitrogen consumption is likely to increase in the region by 1.2 percent, while consumption of phosphate and potash is likely to increase by 0.4 and 0.9 percent respectively, per year during 2014 to 2018. The region would continue to be in deficit of nitrogen, phosphate and potash during the forecast period (see Table 13).

Table 14 presents the summary of regional potential balance of nitrogen, phosphate (H_3PO_4 based) and potash during 2014 to 2018.

Figure 9 indicates the regional potential N, P_2O_5 and K_2O balance situation in 2018: the terminal year of the forecast period.

Annex 1

Explanatory notes on supply, demand and balance

In October 2006, the FAO/Fertilizer Organizations Working Group adopted a new protocol for the preparation of nutrient supply/demand balances based on the work of IFA’s Production and International Trade Committee in 2005/2006. The main objectives of the revised protocol were to take into account the resilient surplus between production and consumption and to update the parameters used for the computation of supply and losses.

1. All fertilizer references are in terms of plant nutrients: nitrogen (N), phosphate (P_2O_5) and potash (K_2O). Even if for convenience P and K are stated, they actually refer to P_2O_5 and K_2O, respectively.

2. Fertilizer demand and supply data refer to the calendar year.

3. Definitions of the terms used and their relative criteria are listed below:

Capacity: nameplate capacity.

Supply: effective capacity, representing the maximum achievable production. Supply is computed from the “nameplate capacity” (theoretical capacity), multiplied by the highest operating rate achieved in the previous 5 years. For new plants, a ramp-up of the operating rates was established for the first 3 years of operation, ranging from 85 to 100 percent.

Demand:

Fertilizer demand is the ability or the willingness of farmers to buy fertilizer at a given point in time. It is calculated on the basis of the probable consumption in one calendar year, taking into account the allocation between two agricultural years.

Non-fertilizer demand: consumption for non-fertilizer use, referred to as industrial use. It includes feed uses. Net non-fertilizer demand excludes the use of products that are recovered as by-products from industrial processes and then used as fertilizers.

Total demand: Fertilizer demand + non-fertilizer demand.

Losses: The unavoidable losses during the life cycle of a product, from production to final consumption. The extent of loss is estimated as a percentage (between 1 and 3 percent) of total fertilizer and non-fertilizer demand.

Unspecified usage: Unspecified usage account for the historical residual tonnage from the production/consumption balances. The tonnage could be used either in fertilizer or in non-fertilizer products.

Potential balance: is the difference between potential supply and total projected demand (fertilizer demand + non-fertilizer demand). Regional balance is a medium-term indicator of potential changes in fertilizer nutrient demand and supply in the region. Changes in installed supply capacity, operating rates and demand vary annually.