CMD 2012: Fertilizer Market Attractiveness (Dag Tore Mo)

Fertilizer market attractivenessDag Tore Mo, Head of Market Intelligence

1

Capital Markets Day 2012 – 4 December

A third year of lower grain stocks

1 950

2 000

2 050

2 100

2 150

2 200

2 250

2 300

2 350

06 07 08 09 10 11E 12F 13F

Million tons

Consumption Production

Source: USDA, November 2012

Grain production and consumption Days of consumption in stocks

55

60

65

70

75

80

85

06 07 08 09 10 11E 12F 13F

Days

2


Main agricultural commodity

prices at historic high levels

0

50

100

150

200

250

300

1/2004 1/2005 1/2006 1/2007 1/2008 1/2009 1/2010 1/2011 1/2012

Index

FAO price index

Cereals Price Index Food Price Index Annual average Food price index

Source: FAO, November 2012

3


100

200

300

400

500

600

700

800

900

100 150 200 250 300 350 400 450 500

Ure

a f

ob

Bla

ck

Se

a

Wheat fob US Gulf

Relationship between wheat and urea prices

May-Sep 08

Feb-Mar 08

Oct 12

Apr-May 12

4


Main fertilizer commodity prices

0

100

200

300

400

500

600

700

800

900

Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

USD/mt

Urea fob Black Sea DAP fob Tampa MOP fob Vancouver

Source: International publications

5


Upgrading margins from ammonia to urea

0

100

200

300

400

500

600

700

800

Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12

USD/t

Urea fob Black Sea 0.6 * Amm + 15

Source: Average of international publications

6


75

80

85

90

95

100

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Million tons N

Source: IFA

Trend growth from 2001 to 2011 of 2.1% per year

Above trend growth for nitrogen

outside China in 2011

7


…of which a major part has come

from high cost regions

Source: IFA Annual statistics

2,703

0

1,000

2,000

3,000

4,000

Million tons N

TotalRest of

World

198

China

-1,165

West

Asia

833

Africa

-390

North

America

584

Russia

503

Turkey

392

Ukraine

985

Central

Europe

763

High cost

8


Nitrogen production outside China during

1H2012 estimated 1.6% lower than last year

Source: IFA quarterly survey, covering 70-75% of global production

-600

-500

-400

-300

-200

-100

0

Total

-545

RoWEgypt

-164

Ukraine

-116

Russia

-285

Kilo

ton

s N

9


19,5

1,7

17,8

19,2

3,5

22,7

0

5

10

15

20

25

Pro

du

ctio

n

Exp

ort

Dom

estic

Dom

estic

Exp

ort

Pro

du

ctio

n

Million tons

0,0

1,0

2,0

3,0

4,0

5,0

6,0

7,0

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun

Million tons

2012 2010 2011

Chinese urea production gaining year on year

Chinese urea production Domestic urea balance

Jul-Oct 11/12 Jul-Oct 12/13

8%

Source: BOABC

10


More urea at lower prices exported from China

0

1 000

2 000

3 000

4 000

5 000

6 000

7 000

8 000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Kilotons

2012 2008 2009 2010 2011

Source: BOABC

300

350

400

450

500

550

600

650

700

1 750 1 950 2 150 2 350 2 550

Fob China

Domestic price ex works, RMB/t

Chinese export tax 1 Jul – 1 NovChinese urea exports

2011

2012

11


Lower feedstock cost and lower

domestic urea price in China

1 600

1 700

1 800

1 900

2 000

2 100

2 200

2 300

2 400

2 500

Jan Feb Mar Apr MayJun Jul AugSep Oct NovDec

RMB/t

Domestic urea price in China

2012 2011

Anthracite coal prices, RMB/t

Source: China Fertlizer Market Week

825

1,100 -25%

Nov 12Nov 11

12


Modest nitrogen production increase

in China with urea gaining share

7.5 6.26.7 6.1 5.6

10.3 10.29.6

8.7 9.1

2010

40.0

25.2

2009

41.8

25.5

2008

+10%

44.6

+32%

2012E2011

41.3

26.6

40.2

23.8

2007

40.7

22.9

UreaABCOther

Source: IFA, Chinese statistics

Mill

ion

to

ns N

13


Source: Fertecon urea update October 2012. Consumption data source is IFA. Previous update in brackets.

Year Driving regionsUrea capacity growth relative

to nitrogen capacity

World Excluding China World Excluding China

2011 China 36%

Pakistan 24%

Pakistan 37%

Iran 18%

1.2% (1.3%) 1.2% (1.3%)

2012 China 60%

Qatar 14%

Qatar 34%

Vietnam 20%

3.5% (4.1%) 2.2% (2.1%)

2013 China 63%

Algeria 14%

Algeria 38%

UAE 18%

4.4% (2.7%) 2.6% (3.1%)

2014 China 45%

Egypt 13%

Egypt 25%

Algeria 16%

1.7% (1.0%) 1.5% (1.2%)

2015 China 42%

Saudi Arabia 9%

Saudi Arabia 15%

Brazil 14%

2.6% (1.2%) 2.5% (1.9%)

Gross annual addition 2011-2015 ~2.0%

Assumed annual closures ~0.5%

Net annual addition 2011-2015 ~1.5%

Trend consumption growth from 2001 2.5% 2.1%

Projected nitrogen capacity additions outside

China in line with historical consumption growth

14


Source: Fertecon urea updates

Continued project delays

7,5

5,2

2,5

2,5

1,2

0,4

0

1

2

3

4

5

6

7

8

2012 Oct 11 est.

2012Oct 12 est.

2013Oct 12 est.

Million tons

Additional urea capacity

Startup in UAE in Jan 13

Startups in Algeria in Jul 12, Jan 13 and Jul 13

1 new site in Egypt from Jul 13

Fertecon assumptions:

15


North America imports one third of

consumption

19.8

12.71.8

Total consumptionImports

7.1

4.5

Domestic production

Urea UANAmmonia

Source: IFA, USTIC

Million tons of N

16


80

100

120

140

160

180

200

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Mt Rock

Excluding China

Global phosphate rock production

increased by 3.8% in 2011

Trend growth from 2001 to 2011 of 2.1% per year

Source: IFA

17


Record Chinese phosphate exports in 2011

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5

2005 2006 2007 2008 2009 2010 2011

Million tons P2O5

DAP MAP TSP Other NP

Source: IFA, BOABC for 2011. ( Assuming 25% P2O5 in “Other NP”, included from 2009 )

18


India plays a major role in phosphate markets

55%

16%

Brazil

29%

2011 DAP/MAP/TSP imports

12 mt P2O5

46%

7%

Pakistan

47%

2011 phos acid imports

4.5 mt P2O5

11%65%

USA

24%

2011 phos Rock imports

31.1 mt rock

OtherIndia

Source: IFA

19


Phosphate trade down 11% second

quarter 2012

Source: IFA Quarterly Survey of World Trade, covering approx.95% of world trade (DAP, MAP, TSP and Phos.acid)

IMPORTS EXPORTS

102

China

-276

USA

-181

West Asia

153

RoW

-118

RoWLatin America

160

India

-684

2Q2012 compared to 2Q2011

00

0’ t

on

s o

f P

2O

5

CMD 2012: Fertilizer Market Attractiveness (Dag Tore Mo)

Investor Relations

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