Supply Chain Challenges for Agri-Nutrients...Supply Chain Challenges for Agri-Nutrients Mr. Imthiyas...

Supply Chain Challenges for Agri-NutrientsMr. Imthiyas Mohammed Karamal

Supply Chain Manager – Fertilizers

Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) Q.P.J.S.C.

Transformation: A New Era for the Agri-nutrients Industry

Agenda

• Finding a solution towards weather related and material handling issues

• Embracing technology to achieve greater efficiency

• Trade disruptions

• IMO’s sustainability initiatives (2020 SOx target, 2050 GHG emission

target).


Finding a solution towards weather related and material handling issues

• QAFCO, being the worlds largest single site urea production which is having six

plants with production of . 5.7 Million t urea ad 3.8 million t Ammonia

CHALLENGE

• Ship the product out of the site .

HINDRANCE

• The major hindrance are primarily due to the urea cargo being hydroscopic in nature

IMPACT

• Halt loading operation if humidity exceeds.

• Storage constraints.

• Backlog of vessels


Qatar Fertiliser Company – QAFCOLargest single site urea production facility globally5.7 million t Urea and 3.8 million t Ammonia

Yr. 1973

QAFCO - 1

Yr. 1979

QAFCO - 2

Prilled Urea

550,000 tTotal Prilled

Urea

1 million t

Ammonia

400,000 t

Yr. 1997

QAFCO - 3

Yr. 2004

QAFCO - 4

Yr. 2011

QAFCO - 5

Yr. 2012

QAFCO - 6

Productio

n Capacity

Productio

n Capacity Prilled Urea

500,000 tAmmonia

400,000 t

Production

Capacity

Production

Capacity

Production

Capacity

Production

Capacity

Granular

Urea

800,000 t

Granular

Urea

1,100,000 t

Granular

Urea

1,300,000 t

Granular

Urea

1,300,000 t

Ammonia

600,000 t

Ammonia

750,000 t

Ammonia

800,000 t

Ammonia

800,000 t

Total

Granular

Urea

4.7 million t

Total

Ammonia

3.8 million t

Total

Ammonia

for sale

500 kt


Loading Facilities – 2 Jetties and 5 BerthsDesign Specifications

Description Berth #1 Berth # 2 Berth # 3 Berth # 4 Berth # 5

Depth 12.0 m 12.0 m 12.5 m 12.5 m 13.37 m

Max vessel

capacity (Urea)45,000 DWT 40,000 DWT 60,000 DWT 60,000 DWT 70,000 DWT

Displacement Not available Not available 38,204 MT arrival38,204 MT

arrival

87,200 MT

Maximum

Max vessel

capacity

(Ammonia)

45,000DWT N/A N/A 60,000DWT N/A



SOLUTIONS :-

• Upgradation of loading methods.

• Isolate the loading pathways to avoid external factors.

• Reform conveyor belt ( deal humidity & increase productivity)

• For free flow of cargo, cover the holds with plastic.

• Analysis of previous vessel / data / weather

• Stock compendium



Nu

mb

er o

f C

argo

es


Embracing technology to achieve greater efficiency

• Latest upgraded loading techniques

• Avoid misidentification of malfunctioning equipment

• Accurate prediction of humidity level

• Maintenance of equipment

• Record & alert systems

• Accuracy of cargo-weighing machine

• Control over real time reporting , supply chain visibility

• Implementation of database systems like SAPS/4HANA


Trade Restrictions

• Commodity pricing fluctuations.

• Competition rise from the untapped sources being open

now.

• Logistics challenges

• Spike in Insurance and additional war risk Premiums

• financial institution procedures becomes burdensome

• Regional political policies affecting fixing vessel and freight

rates


Rising Marine Tension

• 12 May 2019, three oil tankers and one bunkering ship damaged off Fujairah

• 4 July 2019, Iranian oil supertanker GRACE 1 seized off the coast of Gibraltar

• 10 July 2019, Iranian boats unsuccessfully tried to seize British tanker BRITISH

HERITAGE but were deterred by British Navy ship HMS MONTROSE

• 20 July 2019, Iran seized British-owned oil tanker STENA IMPERO in Strait of Hormuz

• A second British-owned tanker was boarded by armed guards but was then freed

STENA IMPERO tanker

Flag: UK

Year built: 2018

Length: 183 m

Gross tonnage: 29579 t

GRACE 1 supertanker

Flag: Panama

Year built: 1997

Length: 330 m

Gross tonnage: 300579 t Source: Vesselfinder.com


Escalation of Freight Rates

10

20

30

40

50

60

70

80

90

Mar-

16

Apr-

16

May-1

6

Jun-1

6

Jul-16

Aug-1

6

Sep-1

6

Oct-

16

Nov-1

6

Dec-1

6

Jan-1

7

Feb-1

7

Mar-

17

Apr-

17

May-1

7

Jun-1

7

Jul-17

Aug-1

7

Sep-1

7

Oct-

17

Nov-1

7

Dec-1

7

Jan-1

8

Feb-1

8

Mar-

18

Apr-

18

May-1

8

Jun-1

8

Jul-18

Aug-1

8

Sep-1

8

Oct-

18

Nov-1

8

Dec-1

8

Jan-1

9

Feb-1

9

Mar-

19

Apr-

19

May-1

9

Jun-1

9

Jul-19

Fre

igh

t, U

S$ p

er

metr

ic t

Urea Gran ME to Miss. River US, 40-45 kt Sulphur ME to China, 30-35 kt Ammonia ME to Far East, 22-24 kt

• Insurance costs up by 40-60%

• Freight costs up by 25-30%

Source: CRU


Changes on fuel specificationsIMO 2020


IMO’s sustainability initiatives (2020 Sox,

target, 2050 GHG emission target)

• Current limit 3.5% of Sulphur content in bunker fuel

• 1 January 2020, will be limit to 0.5% of Sulphur content

• There is no ‘grace period’ but by 1 March 2020, vessels are

not allowed to have HSFO on-board unless scrubber-fitted.

• Most ships are expected to utilize new blends of fuel oil

meeting new standards or compliant marine gasoil.

• In designated emission control areas (ECSs) the sulphur

limit will remain at 0.1%.

• Ship Owners planned the fleet modification by installing

scrubber, to burn lows sulphur fuel

• Penalty for non-compliance: varies from state-to-state*

Scrubber fitting is currently the alternative

Enforcement, compliance and monitoring of the 2020 Sulphur limit, responsibility of States party to

MARPOL Annex V1


Getting Ready: Scrubbers

Open Loop••

•

•

•

Seawater scrubs exhaust gas. Treated water discharged back into the sea.Lower investment and operational costs.

Many open loop systems can be converted to hybrid systems.

Water alkalinity can impact performance.More geographical restrictions (parts of US, EU, Singapore, China, Fujairah).

Closed Loop

Hybrid

••

•

•

•

••

•

•

•

Fresh water with alkaline additive (eg caustic soda or magnesium oxide).Water recirculated or collected in a holding tank

Can be used globally

Higher investment and operational costs

Involves hazards of caustic soda and discharging sludge into a tank

Flexible design allows open and closed-loop systemsEnables operator to efficiently manage scrubber use

Higher investment and operational costs

Requires additional space for extra components

Involves hazards of caustic soda and discharging sludge into a tank


IMO’s sustainability initiatives (2020 Sox,

target, 2050 GHG emission target)

CHALLENGS:

• HIGH CAPITAL INVESTMENT

• HIGH MAINTENANCE

• SPECIALISED PERSONNEL

• LIMITED SUPPLY/YARD

• UNCLEAR PRICE DELTA BETWEEN LSHFO AND HFO

• OUTCOME IN 2020 STILL DIFFICULT TO PREDIFICT

• BUNKER AVAILBILTY WILL BE A CONCERN

• CONSIDERING PRESENT HFO PRICES THERE WILL BE A SPIKE OF ABOUT 40% FOR

LSHFO BUNKER

• EXPERT SAYS THAT, LSFO SUPPLY WILL RISE WHICH RESULT IN DECRESING LSFO

PRICE THUS SCRUBBER IS AN UNWORTHY INVESTMENT


The refining sector has the capacity to handle the changes in bunker fuel

• Global refining capacity is set for large increase in 2019 and 2020. Capacity utilizationand operational flexibility are key!

• Additional diesel demand can be met throughincreases in refinery run rates, a shift inproduct yield, capacity growth and higher utilization of upgrading units

• Impact on refineries will be severe but uneven

• Sophisticated units in US, Middle East, Russiaand China stand to benefit the most.

Annual change in refining capacity, kbpd

Source: FITCH Solutions.


IMO 2020 Compliance Options SummaryThe most economical and convenient option is to receive VLSFOObligation is with the Charterers to supply compliant bunkers

• Burning Distillates fuel 0.1% m/m Sulphur

• Burning Blended fuel with 0.5% m/m Sulphur

• Installing scrubbers

• Using LNG

• Adopting lesser known alternative energy solutions such as

methanol, hydrogen fuels or LPG.

Thank youwww.gpca.org.ae

Supply Chain Challenges for Agri-Nutrients...Supply Chain Challenges for Agri-Nutrients Mr. Imthiyas...

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