An Outlook For Fertilizer Demand, Supply, And . - World Bank
Public Disclosure Authorized''d-'.i i.i- , i' , ; L -;' t; ', FLECOi-Y An Outlook for Fertilizer Demand,Supply, and Trade, 1988/89-1993/94Kurt M. ConstantWilliamF. SheldrickYPublic Disclosure AuthorizedPublic Disclosure AuthorizedPublic Disclosure AuthorizedWTP- 137EVETENLMGST NATND
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TMENTSERIESAn Outlook for Fertilizer Demand,Supply, and Trade, 1988/89-1993/94Kurt M. ConstantWilliam F. SheldrickThe World BankWashington, D.C.
Copyright 1991The International Bank for Reconstructionand Development/THEWORLDBANK1818 H Street, N.W.Washington, D.C. 20433,U.S.A.All rights reservedManufactured in the United States of AmericaFirst printing May 1991Technical Papers are published to communicate the results of the Bank's work to the developmentcommunity with the least possible delay. The typescript of thispaper therefore has not been prepared inaccordance with the procedures appropriate to formal printed texts, and the World Bank accepts noresponsibility for errors,The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s)and should not be attributed in any manner to the World Bank, to its affiliated organizations, or tomembers of its Board of Executive Directors or the countries they represent The World Bank does notguarantee the accuracy of the data included in this publication and accepts no responsibility whatsoeverfor any consequence of their use. Any maps that accompany the text have been prepared solely for theconvenience of readers; the designations and presentation of material in them do not imply the expressionof any opinion whatsoever on the part of the World Bank, its affiliates, or its Board or member countriesconcerning the legal status of any country, territory, city, or area or of the authorities thereof orconcerning the delimitation of its boundaries or its national affiliation.The material in this publication is copyrighted. Requests for permission to reproduce portions of it shouldbe sent to Director, Publications Department, at the address shown in the copyright notice above. TheWorld Bank encourages dissemination of its work and will normally give permission promptly and, whenthe reproduction is for noncommercial purposes, without asking a fee. Permission to photocopy portionsfor classroom use is not required, though notification of suichuse having been made will be appreciated.The complete backlist of publications from the World Bank is shown in the annual IndexofPublications,which contains an alphabetical title list (with full ordering information) and indexes of subjects, authors,and countries and regions. The latest edition is available free of charge from the Publications Sales Unit,Department F, The World Bank, 1818H Street, N.W., Wasbangton, D.C. 20433,U.SA., or fromPublications, The World Bank, 66, avenue d'Iena, 75116Paris, France.ISSN:0253-7494Kurt M. Constant is a senior chemical engineer in the Inclustry and Finance Division of the World Bank'sAsia Technical Department. William F. Sheldrick is an international fertilizer consultant.Library of Congress Cataloging-in-Publication DataConstant, Kurt M., 1944An outlook for ferfilizer demand, supply, and trade,1988/89-1993/94 / Kurt M. Constant, William F. Sheldrick.p. cm. - (World Bank technical paper, ISSN0253-7494;no.137. Asia Technical Department series)ISBN 0-8213-1821-71. Fertilizer industry-Forecasting. 2. Market surveys.I. Sheldrick, William F. H. Title. m. Series: World Banktechnical paper; no. 137. IV. Series:World Bank technical paper.Asia Technical Department series.HD9483.A2C65 199191-18455CIP338.4'766862'0112-dc2O
-iii-TABLE OF CONTENTSPRINCIPAL ABBREVIATIONS AND ACRONYMS USED .SUMMARY AND CONCLUSIONS. viviiI.INTRODUCTION .1I.WORLD NITROGEN REVIEW.1A.B.C.D.E.F.G.H.I.J.Ill.WORLD PHOSPHATE REVIEW .A.B.C.D.E.F.G.H.I.IV.Current Situation .1Nitrogen Fertilizer Demand .3Industrial Nitrogen Demand .5World Ammonia Capacity and Supply Capability . 5World Nitrogen Supply Demand Balances .8World Urea Capacity, Supply and Demand .11International Trade in Nitrogen Fertilizers .14International Ammonia Trade .15International Urea Trade .16The Economics of Urea Trade .16Current Situation .19Future Phosphate Fertilizer Demand .20Industrial Phosphate Demand .22World Phosphoric Acid Capacity and Supply Capability . 22World Phosphate Supply Demand Balances.23International Trade in Phosphate Rock.25The Economics of Phosphate Rock Trade .26Processed Phosphate Trade .28The Economics of Diammonium Phosphate Trade. 33WORLD POTASH REVIEW .A.B.C.D.E.F.G.1934Current Situation .34Future Potash Fertilizer Demand .,.35Industrial Potash Demand .37World Potash Mines Capacity and Supply Capability . 37World Potash Supply Demand Balances. 38International Potash Trade .39The Economics of Potash Trade .,,.43
- n Fertilizer Prices.Phosphate FertilizerPrices.Potash Fertilizer Prices.Future Fertilizer Prices.4648494950WORLDFOODPRODUCTIONAND FERTILIZERUSE. 50VI.A.B.Current Food Situation.50Future Food and Fertilizer Needs.51FERTILIZERUSEAND THE ENVIRONMENTVIl.A.B.C.D.E.F.53General.53Nitrogen Fertilizers.54Phosphate Fertilizers.56Cadmium.56Radioactivity.57Low Input SustainableAgriculture.57ANNEXES1 A.1 B.iC.2.3.4.5.6.7.8.9.10.11.12.13.14.World Bank/FAO/UNIDO/lndustry59.Nitrogen Supply/DemandBalanceisWorld Bank/FAO/UNIDO/lndustryPhosphate Supply/DemandBalances. 73World Bank/FAO/UNIDO/lndustry85Potash Supply/DemandBalances.92IncrementalNitrogen Demand 1988/89-1999/2000 .93Regionaland World Urea Capacities.97Ammonia Trade 1988 .Urea Trade 1988 .98Incremental FertilizerUrea Demand 1988/89-1999/2000 . 1t00Investment and RealizationPrice Data for Potential Urea Projects. 101103Incremental PhosphateDemand 1988/89-1999/2000 .104PhosphateRock Trade 1988.106Total DeliveredCost of ashIncremental108Potash Trade 1988.110.Total DeliveredCosts For Potashi111Fertilizer Price Forecastin 1990 US .
Nitrogen Fertilizer Average Yearly Growth Rates .Nitrogen Fertilizer Supply/Demand Balances.Urea Capacities Commissioned within 4 Year Periods .International Nitrogen Fertilizer Trade 1988/89 .International Ammonia Trade 1989 .International Urea Trade 1989 .Phosphate Fertilizer Average Yearly Growth Rates.Phosphate Fertilizer Supply/Demand Balance.International Phosphate Rock Trade 1988 .International Phosphoric Acid Trade 1988/89 .International Triple Superphosphate Trade 1988/89 .International Diammonium Phosphate Trade 1988/89 .Potash Fertilizer Average Yearly Growth Rates.Potash Fertilizer Supply/Demand Balance.International Potash Export Trade 1987/88-1988/89 .International Potash Import Trade 1987/88-1988/89 .Average Consumption of Fertilizer Nutrients in 1987 .39121415162024262931323539404042FIGURES1A.1 B.2.3A.3B.4.5.6A.6B.7A.7B.8.9.10.11.12.13.Nitrogen Fertilizer Demand 1988/89 .4Incremental Nitrogen Fertilizer Demand 1988/89-1999/2000 . 4Development of Ammonia Capacity .6Ammonia Capacity 1988/89 .7Incremental Ammonia Capacity 1988/89-1994/95 . 7Nitrogen Supply/Demand Balance.8Ammonia Capacity Utilization 1975-1995 .10Fertilizer Urea Demand 1988/89 .13Incremental Fertilizer Urea Demand 1988/89-1999/2000 . 13Phosphate Fertilizer Demand 1988/89 .21Incremental Phosphate Fertilizer Demand 1988/89-1999/2000 . 22Phosphate Supply/Demand Balance .24Phosphate Rock Imports 1989 .27Phosphate Rock Export Costs .28Potash Fertilizer Demand 1988/89 .36Potash Supply/Demand Balance.38Historical Export Price Trends .46
- vi -PRINCIPALABBREVIATIONSAND ACRONYMSUSEDBBLBPLBTUCIFDAPEECFAOFOBIFAIRRK2 0KCIMMNP205SSPTFItpdtpyTSPUNIDOBarrelBone phosphate of lime: measureolfthe tricalcium phosphatecontent inphosphate rockBritish thermal unitsCost, insuranceand yFood and Agriculture Organizationof the United NationsFree on boardInternational Fertilizer Industry AssociationInternal rate of returnPotassiumoxide: measureof active plant nutrient in potash fertilizersPotash (potassiumchloride)MillionNitrogen: measureof active plant nutrient in nitrogen fertilizersPhosphoruspentoxide: measureof active plant nutrient in phosphatefertilizersSingle superphosphateThe Fertilizer Institute of the USMetric tons per dayMetric tons per yearTriple superphosphateThe United Nations Industrial DevelopmentOrganizationFertilizerStatistical DataStatistical data are based on the FAO regional economic classification Most statisticaldata presented in this outlook use the FAO fertilizer year 1 July - 30 June. For countriesthat report their fertilizer statistics on a calendar year basis, data are shown under thefertilizer year, the first part of which corresponds to the calendar year, i.e. 1988 data areunder 1988/89.
- vii -SUMMARYAND CONCLUSIONS1.This report reviews the outlook for the international fertilizer industry through2000 with regard to demand/supply and balances for nitrogen, phosphate and potassiumfertilizers. The impact that new fertilizer use will have on fertilizer trading patterns and theieconomics of fertilizer trade in the future is also reviewed. The report also discussestheneed for new fertilizer consumption to meet increasing world food needs and the impact:that environmental considerations are having on the fertilizer industry. Further, fertilizerprice information is also discussed and an outline of fertilizer price projections through2000 derived from the World Bank integrated agricultural/fertilizer model is given.2.The regional and world supply demand and balances presented in the reportand on which the review is mainly based were prepared by the WorldBank/FAO/UNIDO/IndustryFertilizerWorking Group in Washington during November 1990.Country fertilizer plant and mine capacities have been derived from the Working Group'splant and mine lists. Regional demand is assessedby the Group on a "Delphi" Principle,but individual contributions are based on a range of methodology including trendprojections, econometric modelling, agricultural programs and sales forecasts. It isimportant to note that at the time the supply demand balances were being prepared,manychanges were occurring in the fertilizer industry in Eastern Europe, particularly in theUSSR. The crisis in the Middle East had also developed into a major conflict. Althoughevery endeavor was made to allow for these changes in both supply and demand, but itmay be some time before their full impact is known. However, the two major assumptionsmade in preparing the balances, namely that the crisis in the Persian Gulf would beresolved relatively quickly and that oil prices would stabilize at a level of US 20/BBL orbelow, still hold following the February 1991 cease fire in the Persian Gulf. TIhe supplydemand balances presented in this report therefore maintain their validity.Nfii"oaen3.In 1988/89, world nitrogen consumption reached 79.6 million tons N. About30% of this demand was in the developed market economies and about 46% in thecentrally plannedcountries of Eastern Europeand Socialist Asia. Only about 24% was inthe developing countries. Overall world nitrogen consumption is projected to increase byabout 1.6% on average per year through 2000. There will be little increase in the
-viii-developed market economies and about 80% of new demand will take place in thedeveloping countries of the Far East and Socialist Asia.4.Most new ammonia and urea capacity in the next five years will be built inthe Far East and Socialist Asia although several new plants based on low-cost gas will bebuilt in the Near East. Very little new capacity is planned for the developed countries.During the next few years, through 1992/93, the nitrogen supply situation is expected tobe tight. In 1993, there will a short peaking in the surplus as several new plants come onstream in the Far East. The largest nitrogen deficits will be in the Far East and SocialistAsia. The largest surplus will be in Eastern Europe. China will remain the largest netimporter and the USSR the largest net exporter of nitrogen through the next decade.About 70% of all new nitrogen demand will be as urea.5.New urea capacity will be required to meet nitrogen fertilizer needs throughthe second half of the 1990s and a comparisonhas been made to assessthe economics ofurea production in different locations to meet the needs of the major urea markets. Thepreferred location to meet the markets of the Far East and Socialist Asia will be in the NearEast and Far East countries with low cost gas. Plants on new sites anywhere incurringhigh costs of infrastructure are not likely to look attractive and most new plants will needto be built on existing sites to be viable.PhosDhates6.World phosphate consumption in 1988/89 was 38.0 million tons. The usepattern was similar to that for nitrogen with about 30% of demand in the developedmarket economies and 45% in the centrally plannedeconomiesand 25% in the developingcountries. Overall world phosphate demand is expected to be about 1.2% per yearthrough 2000. There will be little growth in the developed market economies and someregions, such as Western Europe, are expected to show a steady decline. The largestgrowth will take place in developing countries particularly the Far East. There will also besignificant growth in Socialist Asia, but in the centrally plannedcountries of Eastern Europea significant decline in consumption is expected.7.Most new investment in phosphate fertilizer plants will take place wherethere are phosphate rock deposits and favorable aspects for either domestic consumptionor export trade. There will be large investments in China in both phosphate mining and
- ix-processing capacity over the next decade to meet the urgent need for growing phosphatedemand. Both Morocco and Jordan have plans to increase processed phosphate capacitywhen market conditions improve. The main surplusareas will continue to be the USA andNorth Africa and the main deficit areas will be the Far East, Latin
data presented in this outlook use the FAO fertilizer year 1 July -30 June. For countries that report their fertilizer statistics on a calendar year basis, data are shown under the fertilizer year, the first part of which corresponds to the calendar year, i.e. 1988 data are under 1988/89.
World fertilizer trends and outlook to 2022 4 DEMAND Demand for fertilizer use Forecasts of world demand for nitrogen, phosphorus and potassium for fertilizer use, up to 2022, are provided in table 3 (and figure 3). Regional and sub-regional forecasts are provided in annexes 1, 2 and 3. 70 000 60 000 50 000 40 000 30 000 20 000 10 000 0
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Table 1.1 Demand Management (source: taken from Philip Kotler, Marketing Management, 11th edn, 2003, p. 6) Category of demand Marketing task 1 Negative demand Encourage demand 2 No demand Create demand 3 Latent demand Develop demand 4 Falling demand Revitalize demand 5 Irregular demand Synchronize demand 6 Full demand Maintain demand
1. Dry fertilizer and its active ingredients are both gravi-metric—in other words, expressed as a weight per area. 2. Liquid fertilizer and its active ingredients are expressed on a volumetric basis and expressed as a volume per area. 3. The key point for the conversion from liquid to dry fertilizer is the density of the liquid fertilizer. 4.
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total farm labor demand by 18.3% of a standard deviation and conditional fertilizer demand by 41.6% of a standard deviation. With an own-price elasticity of -0.09, I nd that fertilizer demand among these households is fairly inelastic with respect to fertilizer prices, while a cross-price elast
fertilizer-consuming markets, the current context supports modest fertilizer demand growth prospects in the next five years. Under the baseline scenario, global fertilizer demand is seen as growing on average by 1.5% per annum (p.a.) between the base year (average of the three-year period 2014/15 to 2016/17) and 2021/22.1 Aggregate world
Advanced Financial Accounting & Reporting Accounting concepts Accounting concepts defi ne the assumptions on the basis of which fi nancial statements of a business entity are prepared. Certain concepts are perceived, assumed and accepted in accounting to provide a unifying structure and internal logic to accounting process. The word concept means idea or notion, which has universal .
