Post on 13-Feb-2018
Overview of Industrial Urea Markets: Applications and Opportunities Prepared by Monica Baker – Research Manager, Integer Research TFI Fertilizer Technology and Outlook Conference Philadelphia, PA November 13th, 2012
www.integer-research.com
Agenda
November 13th 2012
• Industrial urea markets: o How big is the market? o Key applications: resins, NOx controls, feed and others o Global and regional breakdown o North American market drivers o Europe’s integrated structure o Influencing factors: legislation
• Opportunities:
o Future opportunities and challenges
Market size and breakdown
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Non-fertilizer urea represents 11% of global urea consumption
180,000
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
0 2015 2014 2013 2012 2011 2010
Fertilizer Industrial
‘000 tonnes
Source: IFA, Integer
November 13th 2012
www.integer-research.com
Industrial urea applications & industries
• Resins and adhesives;
• Melamine;
• Environmental controls;
• Animal feed;
• Pharmaceuticals;
• Cosmetics;
• Foliar applications;
• Hydrazine;
• Cyanuric acid
• Chemicals;
• Wood-working;
• Textile and paper;
• Automotive;
• Industrial pollution controls;
• Agriculture;
• Medicine;
• Cosmetics;
• Specialty fertilizer
Applications Industries
November 13th 2012
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Industrial urea demand drivers by region: legislation & economic growth
North America South America Europe Asia Pacific
1 Mobile (on and off-highway) and stationary NOx abatement legislation
Construction industry growing strongly
On and off-highway and stationary NOx abatement
Resins market to grow strongly driven by investment in the region
2 Economy and construction industry looking up and immigration trends underpinning resins rebound
On-road heavy-duty trucks NOx abatement legislation kicked in in Brazil 1 Jan 2012
Resins are strong but have suffered a setback. Increasing activity in Russia?
Pull from NOx abatement legislation has been strong in Japan, Korea and Australia and NZ, and China is moving
3 Legislation and lobbying on formaldehyde content in wood-based furniture
Cattle feed consumption to increase with disposable income and more meat-based diets
Cattle feed and pharmaceuticals to remain resilient
Cattle feed use is growing but unevenly according to disposable income. Weather is a strong variable.
4 Cattle feed and pharmaceuticals to remain resilient
Pharmaceuticals also developing strongly in some countries
Pharmaceutical industry to develop in the East of the region
Pharmaceutical use is resilient in advanced economies, has potential in developing countries
November 13th 2012
Source: Integer
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UF and MUF resins represent just over 80% of the industrial urea market globally
Source: Integer
4%
7%
84%
5%
Others SCR Feed Resins
2010: 17.2 million tonnes
• Just over 80% of consumption is represented by resins. UF and MUF resins are used by the wood-working industry as adhesives and glues in furniture and buildings.
• The second largest use for urea in industrial applications is as a protein supplement in animal feed and, growing fast, the third use is as urea solution or AUS 32 in SCR-equipped vehicles, targeted at lowering NOx emissions from on and off –highway vehicles, as well as from stationary sources such as power stations, cement factories and industrial boilers and incinerators. SCR is also a good choice to meet 2014 GHG targets.
• Other uses include pharmaceuticals and other minor segments.
November 13th 2012
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In North America, the share of resins has shrunk since the peak of urea consumption in 2006/2007. Environmental use is the fastest growing
Source: Integer
17%
65%
2%
16%
Others SCR Feed Resins
2010: 1.7 million tonnes
• Resins and glues/adhesives used to represent 80% of the market for industrial-grade urea in North America before the recession of 2008/2009 took hold of the building and construction industries, prompting a major step change in consumption for these products.
• Demand for all types of resins, adhesives and sealants used in the building and construction sectors peaked in 2006-2007, with the abrupt end of the housing boom and has shrunk dramatically since 2008 and 2009, in some extreme cases even by as much as 50% in some areas of the region, and at least by 30% in others.
• SCR applications - stationary and mobile - are now a larger segment for urea consumption and represent around 16% of the market. Cattle feed comes in at around 17% and pharmaceuticals and others at 2% - with pharmaceuticals accounting for around 1.4%.
November 13th 2012
Market drivers in North America
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Environmental uses have been and are likely to continue to drive industrial urea growth in North America
Source: Integer
500
1,500
2,000
2,500
1,000
0
+8%
2015 2014 2013 2012 2011 2010
Stationary SCR Mobile SCR Resins Others Animal Feed
‘000 tonnes
November 13th 2012
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USA – Urea consumption into resins falls in 2008-2009
Source: US Census Bureau, Integer
US housing permits (monthly series), ‘000 units 250
200
150
100
50
0
-81%
01. Jan
2012
01. Jan
2011
01. Jan
2010
01. Jan
2009
01. Jan
2008
01. Jan
2007
01. Jan
2006
01. Jan
2005
2,000
1,500
1,000
500
0
-33%
2010 2007 2008 2009
Urea consumption into resins, ‘000 tonnes
November 13th 2012
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Going forward? Towards a five-year high for housing permits
US housing permits (monthly series), ‘000 units
01. Jan
2010
01. Jan
2009
01. Jan
2008
01. Jan
2007
01. Jan
2006
01. Jan
2005
220
200
180
160
140
120
100
80
01. Jan 2011
60
40
20
0
+70%
01. Jan
2012 Source: US Census Bureau, Integer Industrial Urea Market Report
November 13th 2012
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DEF supply infrastructure
Source: Integer
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Urea consumption into Diesel Exhaust Fluid (DEF) in the USA
Source: Integer, excludes stationary, rail, marine and barge
600
500
400
300
200
100
0 2015 2014 2013 2012 2011 2010
700
50
150
250
350
450
550
650
750
‘000 short tonnes
November 13th 2012
Light-duty & pickups Off-highway equipment On-highway Class 4-8
Europe’s integrated structure
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Strong industrial use for urea in West Europe
51% 49%
Fertilizer use Non-fertilizer use
Urea
Melamine
UF/MUF resins
Crosslinking with
PU/acrylates
AdBlue
The BASF model
November 13th 2012
Source: Integer
Fertilizer vs non-fertilizer use
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Environmental uses to drive West European demand growth, while resins look strong in East Europe
Source: Integer
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
+2%
2015 2014 2013 2012 2011 2010
Resins SCR Feed Others
1,100
1,000
900
800
700
600
500
400
300
200
100
0
+6%
2015 2014 2013 2012 2011 2010
‘000 tonnes ‘000 tonnes East Europe West and Central Europe
November 13th 2012
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Russian industrial N markets are recovering
650
600
550
500
450
400
350
300
250
200
150
100
50
0 2009 2008
-45%
+11%
2007 2013 2012 2011 2010
‘000 tonnes N
Source: Azotecon
November 13th 2012
Influencing factors
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Influencing factors for resins: legislation
•JIS/JAS F**** (0.05mg/m2h) Japan
•E1 (<0.75ppm)
•E0 (<0.07ppm)
•Formacare
Europe
•CARB (<0.75ppm)
•Greenguard USA
November 13th 2012
Legislation limiting formaldehyde use in wood
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Influencing factors for environmental uses: legislation
November 13th 2012
NOx Abatement Legislation timeline (USA)
Application Legislation Targets Start date
ON-HIGHWAY APPLICATIONS Use of DEF compulsory to reduce NOx emissions
New heavy-duty vehicles EPA 2010 - January 2010
OFF HIGHWAY APPLICATIONS Reduction of NOx and other pollutants
Ag/construction and mining machinery
Transition 2010-2014 from T4 interim to T4 final
STATIONARY APPLICATIONS NOx and mercury emissions reduction
Power plants ‘Transport Rule’ approved 2010 and aiming to reduce NOx emissions by 52% by 2014
NOx and mercury emissions reduction
Cement factories Approved 2010 to reduce mercury, soot, smog and NOx emissions. Comes into effect 2013
NOx and mercury emissions reduction
Industrial boilers and waste incinerators
Approved 2011 to establish work practice standards. Public review closing July 2011
MARINE APPLICATIONS Reduction of NOx and other pollutants
Ships and ocean-going vessels
US EPA Tier 4 from 2016 for US flagged vessels
Source: U.S. EPA, Integer
Opportunities & challenges
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Opportunities & challenges
• Opportunities for growth in the resins and environmental sectors
• Strongest industrial urea markets are still North America and Europe in terms of diversification and margins
• Environmental uses have taken over as the main driver for industrial urea growth
• Fastest developing markets for industrial urea are Latin America, Turkey, Russia, Southeast Asia and East Asia, chiefly China
• Industrial urea fetches a premium to fertilizer-grade urea for high-purity grades
• Legislation and strict standards are important drivers for most applications
November 13th 2012
• What does the supply/demand balance look like?
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Urea - Demand side
November 13th 2012
100,000
300,000
250,000
200,000
150,000
50,000
0
+99,202
2030 2016 2011
SS Africa SE Asia & Oceania S Asia North America MENA Latin America FSU Europe E Asia
‘000 tonnes
Source: Integer Nitrogen Cost and Profit Margin Service
Global urea demand growth projections 2011-2030
www.integer-research.com
Urea - Supply side
September 19th, 2012
Source: Integer Nitrogen Cost and Profit Margin Service
15,000
7,452
13,417
-1,939-1,357
7,848
44,563
4,9673,011
-2,428-1,170
2,446
7,700
407
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
0
-5,000 Sub-
Saharan Africa
Russia
ROTW-low
ROTW-high
Pakistan
North Americ
a
MENA
Indonesia
India Europe-Oil
indexed
Europe-Hub
China
Caribbean
Belarus Baltics Ukraine
‘000 tonnes Projected urea capacity changes by region 2011-2030
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Implications
November 13th 2012
• Total net capacity additions are likely to total 99 million tonnes 2011-2030, responding strongly to demand growth in fertilizer and industrial applications
• Most of the additions will take place in low-cost locations, with some closures taking place in high-cost locations
• North America is attracting strong interest for N investment and industrial applications are on existing producers’ and newcomers’ lists
• ETS III will impact N costs in Europe and is prompting closer scrutiny of the region’s nitrogen assets
• Overall, demand growth will be met by expansions or new builds
Thank you! For more information: Monica.Baker@integer-research.com
Data and analysis from: Industrial Urea Market Survey AdBlue & DEF Monitor/DEF Tracker The Emerging DEF Market Nitrogen Cost & Profit Margin Service