Post on 07-Apr-2020
PotashCorp.com
Fertilizer Market
Trends and Outlook
December 10, 2013
Jeff Holzman
Director, Market Research
This 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 that are not
historical fact. These statements are based on certain factors and assumptions including with respect to: foreign exchange
rates, expected growth, results of operations, performance, business prospects and opportunities and effective tax rates.
While the company considers these factors and assumptions to be reasonable based on information currently available, they
may prove to be incorrect. Several factors could cause actual results or events to differ materially from those expressed in the
forward-looking statements, including, but not limited to the following: variations from our assumptions with respect to foreign
exchange rates, expected growth, results of operations, performance, business prospects 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 materials and 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 contract negotiations within major markets; economic and political uncertainty around
the world; timing and impact of capital expenditures; risks associated with natural gas and other hedging activities; changes
in capital markets; unexpected or adverse weather conditions; changes in currency and exchange rates; unexpected
geological or environmental conditions, including water inflows; imprecision in reserve estimates; adverse developments in
new and pending legal proceedings or government investigations; acquisitions we may undertake; strikes or other forms of
work stoppage or slowdowns; rates of return on and the risks associated with our investments; changes in, and the effects of,
government policies and regulations; security risks related to our information technology systems; and earnings, exchange
rates and the decisions of taxing authorities, all of which could affect our effective tax rates. Additional risks and uncertainties
can be found in our Form 10-K for the fiscal year ended December 31, 2012 under the captions “Forward-Looking
Statements” and “Item 1A – Risk Factors” and in our other filings with the US Securities and Exchange Commission and the
Canadian provincial securities commissions. Forward-looking statements are given only as at the date of this release and the
company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law.
Forward-looking Statements
Agriculture and Fertilizer
Market Update
Source: FAO
Million Tonnes
Fruits & Vegetables
Million Tonnes
Oilseeds
Million Tonnes
Cereals
Rising Crop Production Drives Need for Increased Fertilizer Use
World Crop Production
0
500
1000
1500
2000
2500
1970 1980 1990 2000 2010 0
25
50
75
100
125
150
175
200
1970 1980 1990 2000 2010 0
300
600
900
1200
1500
1800
1970 1980 1990 2000 2010
Source: IFA, Fertecon
Million Tonnes
Potash
Million Tonnes
Phosphate
Million Tonnes
Nitrogen
Rise in Consumption Tied to Crop Production; Political and Economic Events Make for Uneven Growth
World Fertilizer Consumption
0
10
20
30
40
50
60
70
80
90
100
110
1970 1980 1990 2000 2010 0
10
20
30
40
50
1970 1980 1990 2000 2010 0
5
10
15
20
25
30
1970 1980 1990 2000 2010
Source: IFA, Fertecon, PotashCorp
0
20
40
60
80
100
Nitrogen Phosphate Potash
China India
Other Asia Latin America
North America
Potash Has Most Diversity Amongst Regions and Crops
World Fertilizer Consumption by Region and Crop
Fertilizer Consumption by Region Fertilizer Consumption by Crop
Percent
16%
16%
14%
5% 10%
15%
4%
20%
Fruits &
Vegetables
Oilseeds
Sugar Crops
Corn
Other Grains
All Other
Rice
Wheat
Source: IFA, AAPFCO, PotashCorp
0
2
4
6
8
10
12
14 Nitrogen Phosphate Potash
Corn is the Major Driver of US Fertilizer Consumption
US Fertilizer Consumption Profile
Fertilizer Consumption Fertilizer Consumption by Crop
Million Tons
49%
11%
6%
34%
Oilseeds
Corn
All Other
Wheat
Source: USDA
2013F refers to the 2013/14 crop year.
0
5
10
15
20
25
0
2
4
6
8
10
12
14
16
2003 2005 2007 2009 2011 2013F
Use Production Stocks-to-Use
Billion Bushels
Expect Record Production and Improved Demand Prospects
US Corn Supply/Demand
Stocks-to-Use - Percent
EPA Lowers Mandate but Positive Margins Could Support Additional Production
US Ethanol Profile
Producer and Blender Margins – Cents/Gallon US Corn Ethanol Use (Billion Gallons)
0
3
6
9
12
15
10 11 12 13F 14F
Consumption Exports
-40
-20
0
20
40
60
80
100
Jan-10 Nov-10 Sep-11 Jul-12 May-13
Iowa Plant Margin
Chicago Blender Margin
Source: EIA, PIRA, ProExporter, PotashCorp
0
5
10
15
20
25
30
35
40
45
0 4 8 12 16 20 24 28 32 36 40 44 48 52
2013 2012 Prev. 5-yr Avg.
Million Tonnes, Cumulative
Strong Recovery in Offshore Demand for US Corn and Soybeans
US Weekly Corn and Soybean Export Commitments
Source: USDA
Shipping Weeks, September 1 to August 31
0
5
10
15
20
25
30
35
40
45
0 4 8 12 16 20 24 28 32 36 40 44 48 52
2013 2012 Prev. 5-yr Avg.
Corn Export Commitments Soybean Export Commitments Million Tonnes, Cumulative
Shipping Weeks, September 1 to August 31
Million tonnes
0%
10%
20%
30%
40%
50%
60%
0
20
40
60
80
100
120
03 05 07 09 11 13F
Production Global Trade Share
Million tonnes
Soybean Production Expected to Rise; Corn Output to Decline
South America Crop Production
Soybean Production Corn Production
46%
48%
50%
52%
54%
56%
58%
60%
0
20
40
60
80
100
120
140
160
03 05 07 09 11 13F
Production Global Trade Share
Source: USDA, PotashCorp
Percent Share Percent Share
Source: USDA, PRX, Doane, PotashCorp
Million Acres
Wheat
Million Acres
Soybeans
Million Acres
Corn
Expect Some Acreage Shifts in 2014
US Crop Acreage
30
40
50
60
70
80
90
100
30
40
50
60
70
80
90
100
30
40
50
60
70
80
90
100
Lighter shaded area refers to forecast range for 2014.
0
50
100
150
200
250
300
350
400
450
Jan-05 Jan-07 Jan-09 Jan-11 Jan-13
Crop Price Index* Fertilizer Price Index**
Price Index (2005 Average = 100)
Crop and Fertilizer Price Index
Significant Economic Incentive for Increased Fertilizer Usage
Source: Bloomberg, PotashCorp
* Based on corn, soybean and wheat prices (weighted by global consumption)
** Based on urea, DAP and KCl prices (weighted by global consumption)
Potash Market Update
Source: US Geological Survey
Economically Mineable Deposits Are Geographically Concentrated
World Potash Reserves*
Canada
46%
US 1%
Brazil
3%
Russia
35%
China
2%
Jordan
0.5%
Belarus
8%
Israel
0.5%
Chile 2%
* Share of world’s potash reserves; reserves as defined by the US Geological Survey
Other countries total 1 percent
Germany
1%
World Potash Trade
Major Exporters and Importers
Source: Fertecon, Industry publications, PotashCorp
Million Tonnes KCl
0
3
6
9
12
15
18
Canada Russia Belarus Germany Israel Jordan
Million Tonnes KCl
0
1
2
3
4
5
6
7
8
World trade was approximately 44 million tonnes in 2011.
Approximately three-quarters of global production is traded.
Exports Imports
Source: Fertecon, CRU, IFA, 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
0 2 4 6 8 10 12 14 16 18 20
Vale (Brazil)
Intrepid (US)
SQM (Chile)*
APC (Jordan)*
Agrium (Canada)
K+S (Germany)
China*
ICL (Israel,Spain,UK)*
Belaruskali (Belarus)
Mosaic (Canada,US)
Uralkali (Russia)
PotashCorp (Constructed Capability)
Other Producers (Capacity)
Announced Expansions Through 2017
Million Tonnes KCl – 2013-2017F
Majority of the Capacity Increases Are Expected From Existing Producers
World Potash Producer Profile
PotashCorp
Source: Fertecon, PotashCorp
0
10
20
30
40
50
60
Million Tonnes KCl
World Potash Shipments
Slower Demand Periods Have Been Followed by Robust Growth
6.5%
CAGR
5.5%
CAGR
1.7%
CAGR
1.4%
CAGR
Potash Shipments to Key Offshore Markets
Demand Has Been Relatively Strong in Markets Outside of India
Source: Fertecon, Industry publications, PotashCorp
Million Tonnes KCl
0
5
10
15
20
25
30
35
2008 2009 2010 2011 2012 2013E 2014F**
Latin America China Other Asia*
Million Tonnes KCl
0
1
2
3
4
5
6
7
2008 2009 2010 2011 2012 2013E 2014F**
India
* Excludes India.
**Forecast per PotashCorp; represents mid-point of range.
Thousand Tonnes KCl
0.0
0.2
0.4
0.6
0.8
1.0
1.2 2013 Previous 5-Yr Avg
Million Tonnes KCl
Demand Has Strengthened in the Fourth Quarter
North America Potash Shipments
Domestic Producer Shipments Offshore Imports
0
20
40
60
80
100
120
140 2013 Previous 5-Yr Avg
Source: IPNI, TFI, Blue Johnson, PotashCorp
November/December shipments based on PotashCorp estimates. November/December imports based on Blue
Johnson and PotashCorp estimates.
Source: USDA, AAPFCO, PotashCorp
Million Short Tons KCl Equivalent Million Short Tons KCl Equivalent
Application Rates Have Not Kept Pace With Higher Crop Removal
US Potassium Application and Crop Removal
US Total Regional Application Deficit – 2010
0
2
4
6
8
10
12
14
16
1975 1980 1985 1990 1995 2000 2005 2010
Crop removal Fertilizer applied
Calculation based on commercial fertilizer application data, estimated nutrients available from manure and crop removal rates
for all major crops grown in the US.
3.7
1.4
0.7 0.7 0.6 0.6 0.4
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
~ 8.0
million st
Phosphate Market
Update
Source: US Geological Survey
Large Concentration of Reserves in North Africa & Middle East
World Phosphate Rock Reserves*
US 2%
Brazil
<1%
China
6%
Peru 1%
* Share of world’s phosphate reserves; reserves as defined by the US Geological Survey. Total reserves estimated at 67 billion.
Morocco/
WS
75%
Russia 2%
N. Africa/ME
10%
Other Africa
3%
Source: CRU, Fertecon, PotashCorp
52.1
58.6
30
40
50
60
Million Tonnes P2O5
Majority of Capacity Being Developed in Saudi Arabia, Morocco and Brazil
Global Phosphoric Acid Capacity Additions
Source: Fertecon, CRU, PotashCorp
0
10
20
30
40
50
60
70
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013F
India China Other Asia Latin America North America Other
Million Tonnes Product
Indian and Chinese Demand Has a Significant Impact on the Global Market
World DAP and MAP Consumption
0
5
10
15
20
25
2004 2006 2008 2010 2012 2014F
India Brazil Other Asia Other
Million Tonnes
0
5
10
15
20
25
2004 2006 2008 2010 2012 2014F
China Russia US
Morocco Saudi Arabia Other
Million Tonnes
Demand Recovery in India to Support Global Phosphate Trade
World DAP and MAP Trade
World DAP/MAP Exports World DAP/MAP Imports
Source: CRU, TFI, PotashCorp
Million Short Tons
Inventory
Million Short Tons, Cumulative
Exports
Million Short Tons, Cumulative
Domestic Sales
Lower Sales Have Resulted in Elevated Inventory
US DAP/MAP Use and Inventory Exports
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4 2013 Previous 5-Yr Avg
Source: TFI
0
1
2
3
4
5
6
7 2013 Previous 5-Yr Avg
0
1
2
3
4
5
6
7 2013 Previous 5-Yr Avg
Nitrogen Market Update
160
170
180
190
200
210
220
230
240
2009 2010 2011 2012 2013F
Projected Capacity 1-Year Prior Actual Capacity
Capacity - Million Tonnes
Ammonia Capacity Projections vs. Actual Additions
Global Ammonia Projects Have Faced Delays
Source: Fertecon, PotashCorp
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
Jan-10 Jul-10 Jan-11 Jul-11 Jan-12 Jul-12 Jan-13 Jul-13
Thousand Tonne Urea
Impact of China’s Export Tax on Urea Trade Volumes
China Urea Exports by Month
Blue denotes high export tax months; Green denotes low-tax window
Source: NDRC of China, CRU, PotashCorp
0
50
100
150
200
250
300
350
400
US Middle East
Russia China (Coal)
Ukraine (Port)
Cost Range
0
100
200
300
400
500
600 Cost Range
Source: Fertecon, PotashCorp
Note: Cost of production estimates based on natural gas price forecast for 2013.
US$/Tonne US$/Tonne
Production Costs Remain High In Several Key Nitrogen Producing Regions
Delivered Cash Costs to the US Market
Ammonia Urea
0
1
2
3
4
5
6
7
8
9
10
11
Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun
2013/2014 2012/2013 Previous 5-Yr Avg
Source: USDOC, PotashCorp
Note: Nitrogen imports include ammonia, urea, and UAN.
Million Short Tons (N basis)
Potential for a Robust Spring
US Cumulative Nitrogen Imports
Numerous Nitrogen Capacity Announcements; Few Under Construction
Potential North American Nitrogen Project Locations
- High Probability N Projects
- Medium Probability N
Projects
- More Speculative N
Projects
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