Académique Documents
Professionnel Documents
Culture Documents
Industry Handbook
January 2017
List of contents
Ammonia p. 30
Urea p. 35
Nitrates p. 40
NPKs p. 47
Industrial applications p. 89
1
What is fertilizer?
2
Fertilizers are plant nutrients, required for crops to grow
3
Principle of crop nutrition: crop growth is limited by the most
deficient nutrient
Soil conditions
Law of the Minimum (Liebig, 1843): Crop yields
& other growth
are proportional to the amount of the most
factors
limiting nutrient.
YIELD
Plant nutrients have specific
and essential functions in crop metabolisms
Calcium
Potassium
Phosphorus
They cannot replace each other, and lack of any
one nutrient limits crop growth
4
Why mineral fertilizer?
5
Mineral fertilizer replace nutrients removed with the harvest
NPK
Mineral fertilizers are necessary to replace those nutrients that have been removed from the field
6
Mineral fertilizer characteristics compared to organic fertilizer
Often inconsistent
Quality Traceable and consistent
Dependent on source
7
Nitrogen the most important nutrient
Nutrient characteristics
8
Environmental impact of fertilizer
9
Fertilizer reduces the carbon footprint of farming
Fertilizer - an efficient solar energy catalyst
Production is a marginal part of the carbon footprint; efficient application is more important
Huge positive effects of fertilizer use, since higher yields enable lower land area use
Production Application
Yaras production is more energy-efficient than competitor average Higher efficiency with nitrates
Precision farming tools
10
The right nitrogen fertilizer rate is key to avoid nitrate leaching
4 0
none medium right too much
11
Choosing the right nitrogen fertilizer to avoid ammonia
volatilization losses
Volatilization of ammonia gas contributes Ammonia volatilization in % NH3-N per unit N applied
to pollution, affects air quality and induces
soil acidification
19.9
The use of organic or urea-based nitrogen
fertilizer represents the main driver for
ammonia losses
10.8
Nitrate-based N fertilizer or immediate
incorporation of urea into the soil avoids
volatilization losses
3
1.8
0.7
N fertilizer
3.2
Yellow River 1.8
Dry on last 100km: 1.0
0.4
1972: 15 days
1997: 226 days
1981 1986 1991 2000 2006 2009
Water is a key input for crop growth Water requirement (liter per kg of wheat grain)
14
Carbon footprint of urea production differs by region
3.99 4.14
3.78
3.50 3.61
15
Carbon footprint of ammonium nitrate production by region
11.06
8.61
7.23
6.82
3.42
16
The fertilizer industry
17
Consumption trend per nutrient
100
80
60
P 1.6% growth pa.*
40
20
K 2.3% growth pa.*
0
1978 1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017F 2020F
18
Key global fertilizer products
Nitrogen N
Other
Ammonia 11%
4%
DAP/MAP Urea
7% 58%
Potash K2O Phosphate P2O5
NPK
6%
Other Other
3% AN/CAN
9% TSP 10%
NPK 6%
UAN
21% 5% SSP
9% DAP/MAP
108 million tonnes* 57%
MOP/SOP NPK
76% 18%
Source: IFA 2015 (nutrient totals) and 2014 (product split) * Does not include industrial nitrogen applications
19
Nutrient application by crop
By tonnes nutrient
N+P+K Nitrogen
20
Fertilizer consumption by region 5 key markets
Million tons nutrient consumption
Russia
West/Central
1.5
Europe
United States
11.4
11.8
0.6
0.4
N P K
N P K
India 11.4
Brazil 7.4
16.8
5.4
4.8
3.9 N P K
6.0
2.5
N P K N P K
Source: IFA 2014
21
Nitrogen consumption in key regions
60
50
40
30
Europe: 0.8% *
20
North America: 0.4%*
10
Latin America: 4.4%*
0
2000 2004 2008 2012 2016F 2020F
22
The N industry is fragmented, while the P and K industries are
more concentrated
1
2015 figures , million tonnes nutrient Yara CF Agrium
TOAZ PCS
Other non- Orascom Despite a consolidation trend, the industry is
Chinese Eurochem
still higher fragmented
Nitrogen1 Uralchem
Koch
(N) Top 3 producers account for only ~15% of
Chinese Sabic world capacity
players
Mosaic
India
OCP More concentrated than N-industry
Other PhosAgro
Phosphate GCT Top 3 producers account for ~24% of capacity
PotashCorp
(P) China
Vale Ma'aden
(excl.
JPMC
Mosaic)
DAP/MAP
22% Urea
Urea
NPK 55% 84%
1% Nitrates
12%
Source: IFA 2014
24
Nitrogen fertilizer application by region and crop
Russia
EU-27
USA
Other
Oilseeds 21%
Other Wheat 2%
Other 27% 28% Wheat
Maize 48%
33%
7%
Maize Fruits & Sugar crops
49% vegtables Maize 8% Other China
Other Other 13% cereals
7%
cereals Oilseeds cereals
14%
3% Fruits & 10% 15% Other
vegtables Wheat Cotton 3% Fruits &
16%
2% 13% India Oilseeds vegetables
Brazil 6% 30%
Wheat
Other 13% Rice
24% Wheat Maize 15%
Other Maize 24%
25% Fruits & 15%
30%
vegtables
6%
Sugar Rice
Rice crops Cotton 30%
5% 22% 9%
Fruits &
vegtables Cotton Oilseeds
Source: IFA 2010/11 8%
10% 4%
25
Fertilizer company comparison
12.2
Yara
13.4
13.9
Agrium
14.8
7.5
Mosaic*
8.9
5.3
PCS
6.3
3.9
K+S
4.6
5.5
ICL
5.4
3.9
CF L4Q 2015
4.3
26
Yara the leading nitrogen fertilizer company
2016 production capacity, excl. Chinese producers1 (mill. tonnes)
9.9
7.4
8.42
7.2
5.3
4.5
4.2 4.1 3.2 3.3
2.7 2.7 2.7
2.3
1.9
1) Incl. companies shares of JVs * Incl. TAN and CN * Compound NPK, excl. blends
2) As of end 2016
Source: Yara estimates, company info 27
Yara the European cost leader
Production cost index: 100 = European industry average excl. Yara
100 100
90 90
80 80
70 70
60 60
50 50
28
Ammonia
29
Global ammonia production
180
160
140
120
30
Most of global ammonia production is upgraded to urea and
other finished fertilizer
20
15
10
Yara trade 37
5
0
Fertilizer Industrial use
31
Global ammonia trade
4.5
3.6
2.3
Source: IFA
32
Main ammonia trade flows (2015)
Million tonnes
1.7
1.2 0.5 0.6
0.9
1.1
0.6 2.6
3.6
0.5
0.9 1.5
33
Urea
34
Global urea production
160
140
120
24.0
100
Source: IFA
35
Global urea trade
7.9
5.4 4.2
5.0
3.7 3.4
2.6 2.1 1.8
1.9 1.7
1.6 1.5 1.2 1.1 1.0
1.0 0.9
Source: IFA
36
Main urea trade flows (2015)
Million tonnes
0.8
2.2
1.0 1.1
4.3 1.8 1.2 7.0
9.3 2.6
2.2 0.6 2.4
0.5
0.9 0.6 1.5
3.0
37
Chinese domestic urea price and export tax set the global floor
price
USD/mt
Urea price China (inland proxy price)
600
Urea fob Black Sea
500
400
300
200
100
38
Nitrates
39
Nitrate production
Domestic
consumption
1.6
4.5
0.2
3.2
0.1 2.7
2.3 2.2
1.9 1.8 1.8
2.2 2.3 1.6
1.8 0.2 0.1
1.0 0.7 0.0
0.9 0.3 0.4
0.6 0.4
0.2 0.3 0.1
Urea 46% 0%
41
Nitrates vs. urea
Nitrate is the most important fertilizer in Europe
42
Urea and UAN underperformance compared with ammonium
nitrate
Trial results for arable crops (cereals, UK)
Extra N required for same yield Protein content at identical N rate Yield at identical N rate
% % %
118
114 8.6
12.6
12.3 8.3
100 8.3
12.1
To maintain the same yield, significantly Protein content was significantly lower on
more nitrogen was needed from urea and fields fertilized with urea or UAN than with Yield was also significantly lower with urea
UAN than from ammonium nitrate ammonium nitrate and UAN than with ammonium nitrate
Source: DEFRA
43
Yield advantage of nitrates in tropical climate
Brazil, main season corn
2.0
0 50 100 150 200 250 300
Fertilizer N rate (kg/ha)
44
Nitrates agronomic advantage has higher value for cash crops than
for commodity crops
1,553
100
45
NPKs
46
Compound NPKs contain all nutrients in one particle
Compound NPKs NPK bulk blends
A mix of products with different
All nutrients in each and every particle spreading properties
47
Bulk blend segregation during loading and unloading
Urea + DAP + MOP Compound NPK
15-15-15 15-15-15
Compound NPK
20 - 15 - 10 15 + 15 + 15
Compound NPK
13 - 17 - 15 15 + 15 + 15
Compound NPK
12 - 13 - 20 15 + 15 + 15
N P2O5 K2O analysis N P2O5 K2O analysis
in a pile of poor quality blend in a pile of compound NPK 15-15-15
48
Better spreading with compound NPKs
Spreading width
Compound
NPK
49
Compound NPKs give and excellent spatial distribution of
nutrients and as a result higher crop yields
Average yield of potato (n = 9 years)
Potato yield, tonne per ha
NPK
Compound NPKs NPK 41
16+16+16
39
more particles and
better distribution
NPK NPK
N P
Bulk blend
Urea-DAP-MOP
K
fewer particles,
longer distance to roots
50
Compound NPK capacities
47.1
5.3
3.3
2.7 2.7
1.9 1.8 1.8
2.6 2.6 2.5 2.5 2.2 1.5 1.5
6.8 6.2 1.1
4.2 3.7
52
Key value drivers
Ammonia fob Black Sea (USD/t) Urea prilled fob Black Sea (USD/t) CAN cif Germany (USD/t)
525 545 466
516
477 496 499
423 407 379
387 337 316 329
357 341 318
308 244 261 268
289
245 264 240 236 214 240
195
223 249 272 198
06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16
Henry Hub (USD/MMBtu) Oil Brent blend spot (USD/bbl) NOK/USD exchange rate
8.9 104 105 104
97 96 8.1 8.4
6.7 7.0 73 80 6.4 5.6 6.3
5.9 6.0 5.6 5.7 5.9 6.3
4.7 65 62
4.0 4.4 4.1 3.7 51
43
2.8 2.6 2.5
06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16
Source: The Market, Fertecon, CERA, World Bank, Norges Bank Average 2006 2016
53
Nitrogen fertilizer value drivers
Drivers Effect on
54
Drivers of demand
55
Drivers of fertilizer consumption growth
Industrial consumption
Economic growth
Environmental limits (e.g. reduction of NOx emissions)
56
Key crops by producing by region
Other EU-27
Other 21%
25% United States 33%
Ukraine 36%
2% China
EU-27 18%
6% China US
Brazil Russia India
23% 8% 12%
8% 8%
-2%
p.a.
200
0 0
1990 2005 1990 2005
58
Steady growth in grain consumption, while production growth is
more volatile due to weather variations
Grain consumption and production Days of consumption in stocks
Mill. tonnes Days
2,600 95
2,550
90
2,500
2,450 85
2,400
2,350 80
2,300
75
2,250
2,200 70
2,150
2,100 65
2,050 60
2,000
1,950 55
07 08 09 10 11 12 13 14 15 16E 17F 07 08 09 10 11 12 13 14 15 16E 17F
Consumption Production
59
China drives recent years increases in global grain stocks
350
200
300
250 150
200
150 100
100
50
50
0 0
08 09 10 11 12 13 14 15 16E 17F 08 09 10 11 12 13 14 15 16E 17F
60
Profitability of investment in mineral fertilizers
2,000
7.0 Net return: 973 USD/ha
6.0
1,500 5.0
Net return > 8 x investment
4.0
1,000
3.0
2.0
500
1.0
0 0.0
0 50 100 150 200 250 300
Fertilizer application, kg N/ha
Source: Winter wheat yield data: Long term trial, Broadbalk, Rothamsted (since 1856).
61
Breakdown of grain production costs
Example: 2016F average US corn production costs
Fertilizer
20%
21%
Land
26% 15%
Chemicals
4% 10%
Labour
Power & Machinery 5% 5%
22%
0%
2001 2003 2005 2007 2009 2011 2013 2015 2017F
5.0
6.6 6.0
5.2 3.0 2.9 2.5
3.3
China Viet Nam Indonesia Bangladesh India US Brazil Argentina China India
Wheat
China (winter wheat)
China (spring wheat)
India (Rabi)
USA (winter wheat)
USA (spring wheat)
Europe (winter wheat)
FSU (winter wheat)
Rice
China (single crop)
China (early double crop)
China.(late double crop)
India (Kharif)
India (Rabi)
Planting/seeding
Harvest
Source: USDA
64
N-fertilizer consumption from biofuels production
Million tonnes nitrogen
2.2
0.6
0.3 0.4
US - maize for ethanol Europe - rapeseed for biodiesel Brazil - sugarcane for ethanol Others
65
Organic farming represents a marginal share of total cultivated
land
50 1.2%
10
0.2%
5
- 0.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
67
Nitrogen value chain
Raw material Intermediate Finished Industrial
products products products
H, Ar, CO etc
Industrial gases
C02
Ammonia
Ammonia
Environmental
Urea products
Natural gas
Nitric acid
Industrial nitrogen
Nitric acid Nitrates chemicals
Calcium
Nitrate
68
Fertilizer production routes
69
NPK production routes
70
Nitrogen technology evolution
450
400 Birkeland-Eyde electric arc method
350
300
GJ/tN 250 Cyanamid method
200
150
Haber-Bosch synthesis Steam reforming natural gas
100
50 Theoretical minimum
0
1910 1915 1930 1950 1960 1975 2000
71
Projected nitrogen capacity additions outside China
Capacity additions, excl. China
(mill. tonnes urea1)
8.0
Nigeria 0.7
Iran 1.5
5.7
Indonesia 0.7 5.3
Malaysia 0.6 Algeria 1.2 Nigeria 1.3
Russia 0.2
Egypt 0.6
Saudi Arabia 0.5
Bangladesh 0.2
Romania -1.8
3.6 Russia 1.0 3.8
3.5 Vietnam -0.2
Iran 1.9
~3 Mt = 10 year historical trend
Nigeria 0.7
USA 3.1
Nigeria 1.3 consumption growth
Iran 0.9
Russia 0.3
72
30% of announced nitrogen projects realized on time
Likely and probable ammonia projects in pipeline 2002-2008; Million tons
52
17
30 35
22 22 -70%
11
2
Projects in Added to Total projects Due after 08 Due within 08 Cancelled Delayed Realized
02 pipeline pipeline in pipeline
from 02-08 between 02-08
Note: Chinese projects are excluded from pipeline
Source: 2002, 2004, 2006, 2007, 2008 Fertecon Ammonia Outlook Reports
73
5 year typical construction time for nitrogen fertilizer projects*
46 years
Business
development Concept
Feasibility Prepare
selection Construction Operation
phase for execution
Gas phase
agreement
6-12 months
- check cost assumptions by approaching market
- bidding for contracts and/or equipment
74
Price relations
75
Upgrading margins from ammonia to urea
USD/tonne
900
800
700
600
500
400
300
200
100
0
Jan 01 Jan 02 Jan 03 Jan 04 Jan 05 Jan 06 Jan 07 Jan 08 Jan 09 Jan 10 Jan 11 Jan 12 Jan 13 Jan 14 Jan 15 Jan 16
76
Grain prices important for fertilizer demand
Corn USD/t Urea USD/t
350 700
300 600
250 500
200 400
150 300
100 200
50 100
0 0
1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
77
The urea market has been supply-driven since 2004
USD/t
600
400
300
200
100
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
78
Nitrate premium is mainly a function of crop prices and
marketing
Wheat price, USD/t
CAN price, USD/t
450 400
400 350
350
300
300
250
250
200
200
150
150
100
100
50 50
0 0
05/06 06/07 07/08 08/09 09/10 10/11 11/12 12/13 13/14 14/15 15/16
* Urea fob Black sea adjusted for import costs into Europe and nitrogen content similar to CAN
79
Grain/oilseed prices yearly averages
6 15
4 10
2 5
0 0
06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16
Source: World Bank, December 2016 Average prices 2006 - 2016
80
Cash crop prices yearly averages
3 6
2 4
1 2
0 0
06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16
3 1.5
2 1.0
1 0.5
0 0.0
06 07 08 09 10 11 12 13 14 15 16 06 07 08 09 10 11 12 13 14 15 16
Source: World Bank, December 2016 Average prices 2006 - 2016
81
10-year fertilizer prices monthly averages
800 400
600 300
400 200
200 100
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
USD/t Urea prilled fob Black Sea/Urea granular fob Egypt USD/t DAP fob US Gulf/MOP granular fob Vancouver
800 1,200
1,000
600
800
400 600
400
200
200
0 0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
82
Production economics
83
Yaras operating cash costs are mainly variable
60
Cost of stopping is 2 days energy consumption
Variable costs (87%) Cost of starting is 3 days energy consumption
50 79.1 - Dry raw materials
- Energy
40 - Freight
30 - 3rd party finished fertilizer
20
10
11.8 Other cash cost (13%)
0
84
Ammonia cash cost build-up example
CO2
+ Other prod. cost**: 25 USD/mt urea
tonne urea
= Total cash cost 146 USD/mt urea
Urea
(46% N)
* Process gas cost is linked to natural gas price
** Including load-out Source: Blue Johnson & Associates.
86
Theoretical consumption factors
Ammonia
(82% N)
P and K
Price comparisons should always be based on nutrient tons, not product tons
87
Main phosphate processing routes
2015 production and exports, million tons product
89
Nitrogen has many industrial applications
90
Industrial use accounts for 21% of global nitrogen consumption
Other
11%
Explosives
18% Melamine
21%
Chemicals Glue
76% 58%
91
Global demand development of nitrogen chemicals for industrial
applications is strong
CAGR
Million tonnes nitrogen 3%
11.3
9.5
Urea Ammonia
8.5
23.4
18.8 20.5
Nitrogen oxides (NOx) are a major air quality issue causing serious problems mostly in urban centers related to both the
environment and human health. Legislation around the world drives the business growth.
In the maritime segment Yara offers SCR and scrubber technologies to abate
NOx and SOx (sulphuric oxide) emissions.
93
Calcium Nitrate applications in wastewater treatment, concrete
manufacturing, oil fields and latex industries
Nutriox provides H2S prevention for Corrosion, Odor and Toxicity control
of municipal and industrial waste water systems
Other important applications are in the ceramics, bio-gas and solar CSP
industries
94
Technical Nitrates for Civil Explosives
95
Animal Feed industry with several nutritional products based on
core chemicals
Feed Phosphates
Macro-minerals such as phosphorus and calcium are essential elements to sustain healthy
and productive animal growth
Feed Acidifiers
Antimicrobial effect and lowering pH, replace AGP (antibiotic growth promoter) and
effective against salmonella and moulds
Feed Urea
Source of NPN (non-protein nitrogen) used by rumen micro-organisms forming
proteins, replacing part of vegetable protein
96
Sources of market information
Fertilizer market information
FMB www.fmb-group.co.uk
Fertecon www.fertecon.com
Fertilizer Week www.cruonline.crugroup.com
Profercy www.profercy.com
The Market www.icispricing.com
Green Markets (USA) www.greenmarkets.pf.com
Beijing Orient Business (China) www.boabc.com
China Fertilizer Market Week www.fertmarket.com
97