© 2004 Capgemini - All rights reserved 1
K+S Asia Pacific Pte Ltd KALI Division
K+S Group
Outlook for the Asian K fertilizer market
IFA Crossroads Asia-Pacific, Bali 06.-08.11.2013 By Rolf Haerdter K+S Asia Pacific Pte Ltd, 1 Harbourfront Avenue, 16-05 Keppel Bay Tower, Singapore 098632
K+S Group
K+S Asia Pacific Pte Ltd
Outline of presentation
2
• Factors affecting the Asian Agriculture - global & regional economic development - increased crops demand for food and other uses • Mid- to long-term factors drivers of potash use - changing land-use/cropping patterns - crop management changes • Short-term drivers of potash use - weather conditions - commodity price development - growers’ income expectation • Summary
© 2004 Capgemini - All rights reserved 2
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K+S Asia Pacific Pte Ltd
Factors affecting the Asian agriculture
3
• Strong GDP growth forecast for the next 5 years - SEA economies to expand by 5.4 % p.a. - China’s economy to expand by 8.3 % p.a. - India’s economy to expand by 6.4% p.a. • Population continues to grow within the next 20 years - in SEA from currently 593 Mio to 706 Mio - in China from currently 1.376 Mio to 1.434 Mio - in India from currently 1.190 Mio to 1.530 Mio • Per capita cultivated area further shrinks until 2050 - by about 32% in SEA from 0.19 in 2000 to 0.13 ha - by 10% in China from 0.10 in 2000 to 0.09 ha - by about 40% in India from 0.16 in 2000 to 0.09 ha
Sources: OECD, 2013, UN Pop. Division, 2010, GAEZ, 2009
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K+S Asia Pacific Pte Ltd
Cereal production in Asia: Coping with limited land
4
0.5
-0.2
1.3
0.3 0.3
1.9
0.5
-0.2
012345678
China
India
Indo
nesia
Ban
glad
esh
Vietnam
Tha
iland
Philip
pine
sUSA
Yie
ld (
t/h
a)
-1.0
0.0
1.02.0
3.0
4.0
5.0
Gro
wth
20
00
-10
(%
p.a
.)
Yield 2000 (t/ha) Yield 2010 (t/ha)
Prod. Growth (%p.a.) Yield growth (%p.a.)
Area growth (%p.a.)
Area (Mio ha): 90.1 100.1 17.4 12.1 8.6 13.5 6.8 57.5
Source: FAO, Statistics Division (FAOSTAT)
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K+S Asia Pacific Pte Ltd
Food supply in Asia: Lacking behind most countries
5 Source: FAO, Statistics Division (FAOSTAT)
World food supply (kcal/capita/day, 2009)
K+S Group
K+S Asia Pacific Pte Ltd
Protein and fat still under-supplied in Asia
6
Pro
tein
(g/c
apita/d
ay)
Fa
t (g
/capita/d
ay)
0
50
100
0
50
150
100
Source: FAO, Statistics Division (FAOSTAT), 2009
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K+S Asia Pacific Pte Ltd
Per capita meat consumption increases
7 Source: IFPRI, Feeding the Future’s Changing Diets
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K+S Asia Pacific Pte Ltd
Per capita fruit and vegetable consumption
8 Source: IFPRI, Feeding the Future’s Changing Diets
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K+S Group
K+S Asia Pacific Pte Ltd Higher dietary requirements call for more potash
Source: Fertecon, 2011, IFA, 2009
31%
21%
14%
13%
8%
6%5% 2%
Other Crops
Fruits & Vegetables
Maize
Rice
Soyabean
Wheat
Oil palm
Cotton
Potash use by crop type
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K+S Asia Pacific Pte Ltd
Mid-longterm factors driving potash use in Asia
10
• Diminishing land resources in Asia require higher intensity of fertilization, especially of K.
• Changing diets call for changing land-use/crops pattern towards increased planting of crops with higher K demand (maize, oil crops, fruits and vegetables).
• Oil palm, as the highest productive crop among oil crops, will further play a dominant role in the expansion and intensification of agriculture in SEA. It will dominate the world’s vegetable oil supply under diminishing land resources and protection needs of the existing rainforest areas.
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K+S Asia Pacific Pte Ltd
E-SEA: Potash use by crop type in % of total
0102030405060708090
Cereals Oil crops Others%
Source: Heffer, 2009
K+S Group
K+S Asia Pacific Pte Ltd
Grain production and fertilizer use in China
100
238
382
512
100136 139
165
0
100
200
300
400
500
600
1980 1990 2000 2010
Grain production Fertilizer application%
Source: Zhang, WF., 2012
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K+S Group
K+S Asia Pacific Pte Ltd
0
10
20
30
40
50
1961 1969 1977 1985 1993 2001 2009
N(
Mil
lio
n t
on)
Crop uptake
N fertilizer input
Total N input
• N fertilizer input is equivalent to 1.7 times crop uptake • Total N input is equivalent to 2.4 times crop uptake
China: Nitrogen uptake out of balance with supply
Source: Zhang, FS. and Zhang WF. 2012
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K+S Asia Pacific Pte Ltd
Improved nutrient management increases NUE
Source: Pamplino, M.F. et al. (2013)
*
* NE = Nutrient Expert, fertilizer applied based on site specific nutrient management
Hybrid maize in China (2010-2012)
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K+S Asia Pacific Pte Ltd
Oil palm highest oil production per unit area
15
0
10
20
30
40
50
60
70
Soybean Sunflower Rapeseed Oil palm
Pro
d. (m
io t)
% o
f to
tal a
rea
0.0
1.0
2.0
3.0
4.0
5.0
Oil y
ield
(t/h
a)
Oil production (mio t) % of total area Oil yield (t/ha)
Source: based on Oil world, 2013
Oil production of various oil crops, 2013
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K+S Asia Pacific Pte Ltd
Growing use of palm oil as feedstock for biodiesel
Source: Oil World, 2013
29%
26%
24%
8%
7%6%
27%
20%
36%
6%
6% 5%
Soya oil Palm oil
Rape seed oil Used oil
Tallow Others
Feedstock for biodiesel 2013: (Total: 24.73 mio t)
Feedstock for biodiesel 2009: (Total: 16.18 mio t)
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K+S Group
K+S Asia Pacific Pte Ltd
17
0
2
4
6
8
10
12
14
16
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
Oil p
alm
are
a (
Mio
ha
)
0
0.5
1
1.5
2
2.5
3
K-u
pta
ke
(M
io t)
Malaysia Indonesia K uptake MY K uptake ID
Oil palm expansion, a driving force for K use
Source: USDA, 2010, MPOB, 2010, IPNI
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K+S Asia Pacific Pte Ltd
Oil palm: Best management for larger yields
18 Source: Oberthuer et al. 2013
% y
ield
in
cre
ase
*
*Fresh fruit bunch yield increase in Best management plots over reference plots
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K+S Asia Pacific Pte Ltd
Oil palm: BMP increases K application
0
500
1000
1500
2000
2500
3000
3500
Site 1 Site 3 Site 4 Site 5 Site 6
BMP REFkg K/ha/4y
*Total K application (organic plus inorganic) in BMP plots compared to REF plots over a period of 4 years
Source: Oberthuer et al. 2013
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K+S Asia Pacific Pte Ltd
Potash demand in Asia versus other regions
20
‘000 t K2O
Source: Fertecon, 2012
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K+S Asia Pacific Pte Ltd
Potash import by Asia, selected countries
21
‘000 t K2O
Source: Fertecon, 2012
K+S Group
K+S Asia Pacific Pte Ltd
China: Potash import and consumption forecast
22 Source: Various
K2O (‘000 MT) 2013 2014 2015 2020 Data source
Consumption 5,458 5,476 5,494 CAU
Consumption 7,900 BOBAC
Import 3,700
Import 3,850 3,510 3,660 5,580 FERTECON
Consumption 6,550 6,850 7,250 9,000
Consumption 10,500 11,800 CISIA
Import 5,800 5,800
Consumption 5,700 CRU
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K+S Asia Pacific Pte Ltd
Short-term drivers of potash use
23
Weather conditions • China, droughts in N-China affected 2.09 Mio ha
and typhoons damaged 152 000 ha of crops will push for increased inputs in 2014 to warrant the supply of increased food demand.
• Temporary droughts in VN and Thailand as well as heavy floods delayed fertilizer consumption in 2013, which is expected to resume in 2014.
• India and the whole sub-continent experienced good monsoon rains this year, promoting yields and income of farmers.
• Indonesia's CPO production this year will most likely be lower than expected because of the wet weather in the last dry season disturbing pollination, reducing pressure on CPO stock levels and prices.
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K+S Asia Pacific Pte Ltd
24
Price development agric. commodities 2000-13
0
50
100
150
200
250
300
350
400
450
Jan-
00
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
Pri
ce
in
de
x (
%)
Wheat Maize Rice Palm oil Sugar
Source: World Bank
2000 = 100
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K+S Group
K+S Asia Pacific Pte Ltd
Potash sales to E/SE-Asia: 1st/2nd half 2008-2013
25
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
2008 2009 2010 2011 2012 2013
China 1st half China 2nd half India 1st half
India 2nd half SEA* 1st half SEA 2nd half
Source: IFA, 2013
1000 t
KC
l
*including Indonesia, Malaysia, Philippines, Thailand and Vietnam
K+S Group
K+S Asia Pacific Pte Ltd
Summary
26
• Asia has to produce more and higher value crops to supply the growing populations’ with more protein, fat and bio resources on very limited land.
• In the mid- to long-term, potash use in Asia will be further increased, driven by both expansion and intensification of K-demanding crops/cropping systems.
• With few exceptions, generally favorable weather led to good harvests causing temporary pressures on crops prices, a trend likely to persist during 2014.
• With a good 1st half deliveries, K sales to Asia seized in the second half, triggered by trends in other nutrients and negative statements.
• K demand is likely to resume in 2014 after induced uncertainties are overcome, with a tendency of exceeding the usual growth rates due to under-supply in Q3-4.