trends and opportunities in specialty fertilizer - firt.org · 700.0 800.0 900.0 01‐feb‐1988...
Post on 20-Jan-2019
216 Views
Preview:
TRANSCRIPT
LondonHouston
SingaporeMoscow
DubaiNew York
CalgarySantiago
Rio de JaneiroBeijing
ShanghaiTokyo
SydneyAstana
KievCape Town
RigaSan Francisco
Washington
Market Reporting
ConsultingEvents
Trends and Opportunities in Specialty FertilizerNew Orleans
Blake Hurtik & Lauren WilliamsonNovember 2017 for TFI Outlook
• One of the world’s leading PRAs, Argus is a team of more than 900 staff members in 20 global offices
• Publishing more than 11,000 daily spot and forward price assessments, plus market intelligence for world commodities markets
• Coverage includes:◦ Energy◦ Fertilizers◦ Petrochemicals◦ Metals
• Services◦ Price reporting and indexation◦ Consulting◦ Conferences
• Indexation examples◦ US crude oil◦ US and European refined products ◦ US and European natural gas◦ NGLs◦ US and European environmental markets
The Argus view
Copyright © 2017 Argus Media group. All rights reserved.
Micronutrients Forum on 22 January ‐ Delegates will benefit from all the agronomic and commercial insight needed to leverage their position in this growing market.A dedicated track of presentations focused on Innovation and R&D ‐ Examine developments in soil analysis, crop requirements and new fertilizer blends to meet regional demand
Copyright © 2017 Argus Media group. All rights reserved.
Other
Water Soluble
Enhanced Efficiency
Technical Grades
Blends, Secondary, Micro
Bulk N, P, K
Topics covered
• Drivers• Enhanced Efficiency• Specialty Blends• Company Case Studies • Future
Low volume, high margin
High volume, low margin
Copyright © 2017 Argus Media group. All rights reserved.
Drivers: Resource management, ag profitability, population
Subsidy control
RegulationGHG concerns
Algal BloomsHuman nutritionYield increase
Water scarcity
Irrigated Fields
Unpredictable Weather
BMPs , 4R, new laws
Population growth
Manage costs
Copyright © 2017 Argus Media group. All rights reserved.
N Nutrient Uptake Efficiency Routes
Controlled Release (CRF)
Coated with physical barrier to prolong
breakdown
Polymer, resins, hydrogels, wax
Sulfur, other mineral based coatings
Stabilized Nitrogen Fertilizer (SNF)
Impregnated granule or surface coated to delay nitrification, volatilization
Urease inhibitors reduce volatilization, N loss to
NH3
NBPT, 2‐NPT, NPPT, PPD, triazone,
Nitrification inhibitors delay bacterial action of converting to nitrate N, N
loss to leaching
DCD, DMPP, nitrapyrin, ATS
Slow Release Nitrogen (SRN)
Chemical chain lengthened to slow
release
UF, IBDU, MU, CDU
Enhanced efficiency N
N loss is commonly~30% to leaching
and ~10% to nitrification
Copyright © 2017 Argus Media group. All rights reserved.
Evolution of N management
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
01‐Feb‐1988 01‐Feb‐1992 01‐Feb‐1996 01‐Feb‐2000 01‐Feb‐2004 01‐Feb‐2008 01‐Feb‐2012 01‐Feb‐2016
Urea Nola barge Price $/st
2000s, polymer CRF grows while high cost of SRF production causes decline. Algal blooms gain media attention.
SRF patents 1920‐60s Europe, US. CRF Scott’s Osmocote patent 1967. SCU Nu‐Groand stabilizer nitrapyrin gain in 1970s.
1980s CRFs gain popularity; SRF advances for foliar, fertigation.
1990s DCD approved by EPA, used in Europe, Japan, CRF PolyOn launched. IMC Agrotain launched.
Mid 2000s RFS, high gas costs/urea price impact; broad acre applications begin. Investment interest grows.
2013 West, TX nitrate explosion –need for alternatives sparks coating trend at distributor hubs.
Lower pricing reinforces drive to decommoditize.
Large companies invest heavily in distribution. Vertical integration along SC.
Copyright © 2017 Argus Media group. All rights reserved.
Huge growth in 15 years, but adoption tied to logistics
0
1
2
3
4
5
6
7
8
2000 2016
Global Demand estimates in mn t
SNF CRF SRN
15
60
0
10
20
30
40
50
60
70
80
90
100
2000 2016
Demand (%) by Sector
Professional Consumer General Ag
Strong crop profitability= drive for increased yield
Low crop profitability = drive for cost reductions
Copyright © 2017 Argus Media group. All rights reserved.
• N savings must be higher than the price premium for the product
• In Europe, take $/unit N value of nitrate and capture difference to $/unit N value of urea
• Freight from production point for homogenized products can distort and fragment pricing
• Time lag with underlying commodity price movements creates exposure
• Huge variations in contracts, price formulas, particularly between specialty crops vs cash crops
Pricing challenges for heterogeneous products
0
2
4
6
8
10
12
2013 2014 2015 2016 2017
Theoretical Interior US Distribution Hub Pricing
Urea $/unitAN $/unitSurface coat inhibitorStabilizedPCU
Copyright © 2017 Argus Media group. All rights reserved.
A busy decade of investment - PE’s next goal?Year Year
Agrium buys Pursell tech $75mn 2006 Hanfeng Evergreen sells plants on financial difficulties
2014
Chisso, Asahi, Mitsubishi form JCAM (invest new PCF Taiwan plant 2016)
2009 Koch buys Agrium Advanced Tech; (Yara buys Brazil distributor Galvani stake)
2014
Koch buys Agrotain $94mn (and buys UK dist Bunn, incorporates MU from GP)
2011 Koch licenses N‐tegration technologyYara buys Agrium USWC upgrade facilities
2015
K+S sells Compo (est 1956) to PE 2011 Solvay partners with EcoAgro (est 2014) 2015
Gavilon exclusive distributor Arborite in US, Mexico 2011 Kingenta buys Ekompany (est 2010) and portion of Compo – other division sold to PE
2016
ICL buys division of Scotts $270mn 2011 Stamicarbon invests $6mn in Pursell Agri Tech 2017
EuroChem buys BASF Entec technology (also buys US dist BenTrei in 2015 and Brazil Tocantins 2016)
2012 Yara invests in UAS production in Sliuskill 2017
PE firm establishes Verdesian Life Sciences (also acquires Specialty Fert Products 2015)
2012 Koch Enid Super U expansion 2017
Copyright © 2017 Argus Media group. All rights reserved.
Product life cycle – first mover advantage?
R&D Growth Maturity
Profits
Decline
Fend off competitors in growth phase with legal action to protect patents.
Exploit cost efficiencies. Differentiation via integrated solutions, service models and branding.
Extend maturing phase with new patents, renewals.
Manage PLC toward generics via licensing.
Expanding market share begins to commoditize the product.
Copyright © 2017 Argus Media group. All rights reserved.
Opportunities: vary depending on market position
TECH COMPANIESlicense to
manufacturers or retailers
PROOF OF CONCEPTUniversity studies,
government legitimization via regulation and BMP
certification
RETAIL/DISTRIBUTIONpartners to facilitate supply chain control,
direct sales
BRAND AND PACKAGING
for local brands + niche markets
WHOLESALE PARTNERS
for bin space (if substituting bulk
product)
EQUIPMENT SALES
at distributor /retail level. Rapid “DEMAND THEN DEPLOY” model.
TECH SALES TEAMrequired to convince partners, especially further down chain
TRADITIONAL MANUFACTURER create/acquire tech, license out,
form JVs
ADDITIVE PRODUCERS sell direct to distributors, retailers
Heavy marketing & branding required
“INTEGRATED SERVICE MODEL” with tech tools
tools to incentivize
CONTAINER EXPORTS
bulk exports with liquid additives
Copyright © 2017 Argus Media group. All rights reserved.
Limitations: US farmer profitability improving but still low
$0
$1
$2
$3
$4
$5
$6
$7
$8
$0
$20
$40
$60
$80
$100
$120
$140
$160
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Net farm income Nat cash farm income Avg farm corn price, right
$/bushelbillions
Copyright © 2017 Argus Media group. All rights reserved.
Micronutrients not immune to macro pricing
150
200
250
300
350
400
450
500
550
600
Jul-
12
Sep
-12
Nov
-12
Jan-
13
Mar
-13
May
-13
Jul-
13
Sep
-13
Nov
-13
Jan-
14
Mar
-14
May
-14
Jul-
14
Sep
-14
Nov
-14
Jan-
15
Mar
-15
May
-15
Jul-
15
Sep
-15
Nov
-15
Jan-
16
Mar
-16
May
-16
Jul-
16
Sep
-16
Nov
-16
Jan-
17
Mar
-17
May
-17
Jul-
17
Sep
-17
Granular urea fob Nola DAP fob Nola MOP fob Nola
$/st
Copyright © 2017 Argus Media group. All rights reserved.
• Key micronutrients◦ Sulfur◦ Magnesium◦ Zinc◦ Boron◦ Manganese◦ Copper◦ Iron◦ Calcium
Micronutrient and secondary demand
-
1
2
3
4
5
6
7
8
9
mn
shor
t to
ns
‐ USDA,
Copyright © 2017 Argus Media group. All rights reserved.
• Mosaic introduces MicroEssentials, expands capacity by 1.2mn t/yr to 3.5mn t/yr — 30pc of total capacity
• Morocco’s OCP offers range of enhanced phosphates targeting African market◦ Licenses Shell Thiogro technology to add sulfur to finished
phosphates• Compass Minerals buys Wolf Trax in 2014• ICL converts UK potash mine to focus on polyhalite; Sirius
Minerals begins construction of 10mn t/yr polyhalite mine in UK
Majors go micro
Copyright © 2017 Argus Media group. All rights reserved.
Mosaic sees MicroEssentials growth
15%
17%
19%
21%
23%
25%
27%
29%
31%
33%
0
0.5
1
1.5
2
2.5
3
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q
2013 2014 2015 2016 2017
'00
0 p
rod
uct
ton
nes
DAP/MAP MicroEssentials Percent of total, right
Sales volumes
‐ Mosaic filings
Copyright © 2017 Argus Media group. All rights reserved.
Micronutrients impact: Compass Minerals
60
65
70
75
80
85
90
95
100
105
110
$500
$550
$600
$650
$700
$750
$800
$850
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2012 2013 2014 2015 2016 2017
'00
0st
Sales volume, right Average price‐ Compass Minerals filings
Wolf Trax acquisition helps drive average sales prices
higher
But macro factors like low potash prices carry most
weight
Copyright © 2017 Argus Media group. All rights reserved.
The risk of commodification: Intrepid Potash
$150
$200
$250
$300
$350
$400
$450
$500
0
50
100
150
200
250
300
350
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
2012 2013 2014 2015 2016 2017
Pro
du
ctio
n '0
00
st
MOP Trio MOP sales price, right Trio sales price, right‐ Intrepid filings
Copyright © 2017 Argus Media group. All rights reserved.
Key takeaways
Next trends?
Fertigation, WSFs, adjuvant/surfactant
improvements
P management espin foliar, solubles
“Core” technology
Seed inoculation –rhizobia researchBiostimulants
Biofertilizer (but interaction with finished blends)
Nanotechnology
• Drivers supporting specialty products to remain constant for the foreseeable future
• Limitations tie to traditional agricultural risks and fundamentals
•• Different companies have made
different market entries, with mixed results
• More specialties in the mainstream now leave room for the next wave of niche products – but adoption takes time, proof of concept key
LondonHoustonSingaporeMoscowDubaiNew YorkCalgarySantiagoRio de JaneiroBeijingShanghaiTokyoSydneyAstanaKievCape TownRigaSan FranciscoWashington
Stay Connected
@ArgusMedia Argus-media
+Argusmediaplus argusmediavideo
Copyright notice Copyright © 2017 Argus Media group. All rights reserved. All intellectual property rights in this presentation and the information herein are the exclusive property of Argus and and/or its licensors and may only be used under licence from Argus. Without limiting the foregoing, by reading this presentation you agree that you will not copy or reproduce any part of its contents (including, but not limited to, single prices or any other individual items of data) in any form or for any purpose whatsoever without the prior written consent of Argus.
Trademark notice ARGUS, the ARGUS logo, ARGUS MEDIA, ARGUS DIRECT, ARGUS OPEN MARKETS, AOM, FMB, DEWITT, JIM JORDAN & ASSOCIATES, JJ&A, FUNDALYTICS, METAL-PAGES, METALPRICES.COM, Argus publication titles and Argus index names are trademarks of Argus Media group.
Disclaimer All data and other information presented (the “Data”) are provided on an “as is” basis. Argus makes no warranties, express or implied, as to the accuracy, adequacy, timeliness, or completeness of the Data or fitness for any particular purpose. Argus shall not be liable for any loss or damage arising from any party’s reliance on the Data and disclaims any and all liability related to or arising out of use of the Data to the full extent permissible by law.
Blake Hurtik, editor North American FertilizerLauren Williamson, SVP Fertilizer
Email:Phone:Office:Web:
fertilizer@argusmedia.com+1 713-968-0000Londonwww.argusmedia.com/fertilizer/
top related