NPK markets in Southeast Asia, Japan, and South Korea · 22/10/2015 1 NPK markets in Southeast...

22/10/2015

1

NPK markets in Southeast Asia, Japan, and South Korea

Andrea Valentini Integer Research Ltd, UK

www.integer-research.com

Agenda

• Global overview

• Southeast Asia

• Focus on Indonesia

• Japan and South Korea

22/10/2015

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Global overview


Global NPK compound demand exceeded 23 million tonnes in 2013, and

NPK compounds accounted for 13% of global fertilizer demand

Source: IFA, Integer

Million nutrient tonnes

0

30

60

90

120

150

180

210

2013 2012 2011 2010 2009 2008

87%

Other fertilizers

NPK

13%

World fertilizer demand, 2008-2013 World fertilizer demand (%), 2013

NPK

Potash

Phosphates

Nitrogen

Note: NPK refers to fertilizer compounds containing N, P and K. This category does not include NP, NK or PK compounds

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Asia* accounts for more than half of the global NPK demand

Source: IFA, Integer

0

20

40

60

80

100

120

2011 2009 2010 2012 2013 2008

Potash

Phosphates

Nitrogen

NPK

Million nutrient tonnes NPK

88%

12%

Other fertilizers

Asian fertilizer demand, 2008-2013 Asian fertilizer demand (%), 2013

Note: NPK refers to fertilizer compounds containing N, P and K. This category does not include NP, NK or PK compounds

*Asia in this chart includes China, India, Pakistan Japan, South Korea, Taiwan, all the ASEAN countries


Asia NPK compound market volume ranking

Million tonnes

Source: Integer

10

80

40

20

70

0

30

50

60

25

5

45

35

75

65

55

85

15

20

11

20

14

20

12

20

13

20

09

20

10

20

08

84

6

Asia volume

ranking, 2014

1 China

2 India

3 Indonesia

4 Vietnam

5 Thailand

6 Malaysia

7 Japan

8 South Korea

9 Philippines

10 Australia

Indonesia

India

Other Asia

China

Vietnam

Thailand

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Asia NPK compound market value

Billion US$

Source: Integer

25

0

5

10

45

20

35

15

30

40

20

09

20

08

20

10

20

14

20

12

20

13

20

11

32

7

Asia value

ranking, 2014

1 China

2 India

3 Indonesia

4 Vietnam

5 Japan

6 Thailand

7 Malaysia

8 South Korea

9 Philippines

10 Australia

Japan

Other Asia

China

India

Vietnam

Indonesia

Southeast Asia

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Malaysia’s NPK market is worth almost $1 billion, and is mostly

driven by demand from plantations

0.1

0.0

0.2

0.9

0.7

1.0

0.8

0.6

0.5

0.4

0.3

0.9

NPK compounds

Bulk blended fertilizers

US$ billion

Source: Integer 9

Malaysia’s NPK demand value


Volume of Malaysian demand by product

1.5

0.5

1.0

0.0

2.0

2011 2009 2012 2014 2010 2013 2008


NPK compounds

Million tonnes

Source: Integer 10

22%

Other Non-Plantation

28%

Other Plantation

12-12-17-2 31%

15-15-6-4

19%

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Malaysia is a key NPK producer in the region

11

0

50

100

150

200

250

300

350

400

450

500

550

Union

Harvest

Group

FPM CCM CFC Malaysian

NPK

Fertilizer

Twin

Arrow

Fertilizer

(TAF)

Agrifert

Malaysia

Imports

Domestic production

90%

10%

‘000 tonnes Malaysia’s production estimates, 2013/14


Vietnam’s NPK market is the second-largest in Southeast Asia

3.2

0.6

0.8

0.4

1.4

2.2

0.2

1.2

1.8

2.4

2.6

2.8

3.0

1.6

0.0

2.0

1.0

2013 2012 2014 2011 2010 2008 2009


NPK compounds

Million tonnes

Source: Integer 12

62%

16-16-8 38%

Others

10%

Imports

Domestic production

90%

Vietnam’s NPK demand volume

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Thailand’s NPK market is mostly driven by paddy, and is also the

most important import market in the region

0.2

0.0

0.6

0.4

0.8

1.0

2.4

2.2

2.0

1.8

1.6

1.4

1.2

2008 2010 2014 2009 2013 2011 2012


NPK compounds

Million tonnes

Source: Integer 13

15%

6%

22%

6% 16-16-8

15-15-15

16-8-8 16-16-16

18%

Other

2%

8-24-24

1% 13-13-21

30%

15-15-15

43% Domestic production

Imports

57%

Thailand’s NPK demand volume


The Philippines’ NPK market is rather different compared with its

neighbours in that it used much more blended NPKs

0.20

0.40

0.00

0.60

0.05

0.45

0.15

0.10

0.25

0.30

0.35

0.55

0.65

0.70

0.50

2009 2014 2008 2010 2013 2011 2012

NPK compounds


Million tonnes

Source: Integer 14

14-14-14

72%

28%

Others

32%

68%

Domestic production

Imports

Philippines’ NPK demand volume

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Focus on Indonesia


Indonesian NPK major producers have a combined capacity of

almost 5.5 million tonnes

16

600

800

2,800

1,200

400

200

0

1,000

PT Pupuk

Kujang

Sentana CCM Hanfeng

Evergreen

Agrifert PT Pupuk

Kaltim

PT

Petrokimia

Gresik

Steam granulation

Chemical granulation

Bulk blending

Indonesia’s NPK capacity, 2014

Source: Integer

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In a relatively short space of time there has been a significant

expansion of Indonesian NPK production capacity to serve both

the food and plantation sectors

4.5

3.0

2.5

5.5

4.0

3.5

2.0

0.5

0.0

1.0

1.5

5.0

2012

+21%

2013 2009 2008 2011 2010

Source: Integer

Million tonnes

Total Indonesia NPK production

17

84%

16%

Bulk blends

NPK compound


The increase in production was mainly driven by NPK sales

destined to the non-subsidized market

1.2

2.4

0.4

1.6

1.8

1.4

1.0

0.8

2.0

2.2

0.6

0.0

0.2

2011 2009 2008

+23%

2013 2012 2010

Source: Integer

Million tonnes

Hanfeng

Kujang

Gresik

Other blending

Other producers

Kaltim

CCM

Agrifert

Sentana

NPK production by

company

18

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Subsidized demand is dominated by 15-15-15 compounds

3.0

2.5

2.0

1.5

1.0

0.5

0.0

2013 2012 2011 2010 2009 2008

+19%

Source: Integer

Million tonnes

15-15-15

Other

Indonesia’s subsidized NPK demand

19


Oil palm, rubber and sugarcane account for almost 95% of non-

subsidized NPK demand

1.5

1.0

0.5

0.0

2008 2013 2012 2009 2011 2010

+14%

Source: Integer

Million tonnes Non Subsidised demand (other crops)

Non Subsidised demand (oil palm, rubber, sugarcane)

20

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Demand for non-subsidized NPK is concentrated in Sumatra and

Kalimantan

0.5

1.0

1.5

0.0

2011 2012 2009 2008 2013 2010

Source: Integer

Million tonnes

Sumatra Other regions Kalimantan

Indonesia’s Non- subsidized NPK demand by region

21


Indonesian fertilizer market issues and implication for NPK

demand

• Scarcity of fertilizer due to the price disparity between subsidized fertilizer for crops and non-subsidized fertilizer for estate crops, which often leads to illegal sales of subsidized fertilizer outside of the system. This impacts all fertilizers, including NPKs

• Market distortion due to the dual pricing system: on one hand some farmers are affected by inefficient distribution of subsidised fertilizers, on the other they cannot afford non-subsidised product

• Limited government budget for fertilizer subsidies, and expected reduction in future budgets

• Until recently the local fertilizer industry was affected by a lack of investment. This was in part reversed recently to the benefit in particular of new NPK capacity

• Historical over-application of urea, which should benefit NPKs in the longer term

• We expect plantations to be the main driver of NPK demand growth in the next few years

22

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Japan and South Korea


1.2

1.0

1.4

1.3

1.6

1.5

1.1

0.9

0.7

0.5

0.8

0.6

0.4

0.3

0.2

0.1

0.0

1.2

1.4

1.2

1.3 1.4

1.1

1.3

2011 2014 2008 2009 2012 2010 2013


NPK compounds

US$ billion

Source: Integer 24

Value of Japanese demand by product

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Japan’s NPK demand volume remained relatively stable in the

past decade and is expected to slightly decline going forward

2.6

0.4

0.2

0.0

2.8

2.2

2.0

2.4

1.8

1.6

1.2

1.0

0.8

1.4

0.6

0.7 0.7

1.1

1.3

0.8

1.2 1.2 1.2

0.8

1.3 1.2

0.7 0.8 0.7

2012 2013 2011 2008 2009 2014 2010

1.9

2.1 2.0

2.0 1.9 1.9 1.9

Bulk blended fertilizers NPK compounds

Million tonnes

25

2%

Standard compound NPK

10%

High-analysis NPK

Liquid NPK

NPK blends

2%

41% 45%

NK

Composition of Japan’s

NPK demand, 2014

Japan’s NPK demand volume

Source: JFA, Integer


Japanese NPK demand is evenly distributed across the territory

26

Tonnes

160,000

15,000

1,000


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And this is reflected by the location of local NPK producers

27

Tonnes

160,000

15,000

1,000

NPK compound plant

Major blending site



Several NPK producers operate in Japan, most of which produce

other specialty fertilizers (e.g. CRF/SRF)

28

0

50

100

150

200

250

300

350

Sun Agro MC

Ferticom

JCAM

AGRI

Sumitomo Co-op

Chemicals

Central

Kasei

Chemical

(Central

Glass)

Taki

Chemical

Co

Summit

Agri-

business

Katakura Nitto FC

Japan NPK compound production

estimates by company (2014)

‘000 tonnes

Source: Integer

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Similarly to Japan, South Korea’s NPK demand is also stagnant. The local

NPK producers however are major exporters, unlike their Japanese

counterparts

Million tonnes

Source: Integer, Kosis 29

South Korea’s NPK compound demand and export volume

South Korea NPK capacity, ‘000 tonnes

Company NPK compound Bulk blending

Namhae Chemical 1,360 -

Dongbu Hannong 580 -

KG 300 -

Pungnong 350 100

Hyeop Hwa 200 80

Total 2,790 180

1.1

0.3

0.4

0.9

0.6

1.0

0.2

0.5

0.7

0.0

0.1

0.8

2014

0.93

2013

0.95

0.64

2012

0.66

1.06

2011

0.69

0.81

0.95 1.01

2010

0.84

Consumption

Exports

Thank you for your attention

For further information please contact:

[email protected]

Tel: +81 80 4118 5774

NPK markets in Southeast Asia, Japan, and South Korea · 22/10/2015 1 NPK markets in Southeast...

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