Transformation of the GCC Fertilizer Industry: Past & Present...Transformation: A New Era for the...

Transformation of the GCC Fertilizer Industry: Past & Present

Dr. Abdulwahab Al-SadounSecretary General, GPCA

Transformation: A New Era for the Agri-nutrients Industry

How has the GCC fertilizer industry performed in the

last 50 years?


The industry has been Growing…

0.3 1.32.9 2.9

5.26.9

8.7 10.011.8

13.9

18.4

28.2

33.3

38.4

10

20

30

40

200019801968 1976 20151972 1984 1988 1992 1996 2004 2008 2012 2018

+10.4%

GCC Fertilizer Production Capacity (million tons)

At a 10.4% growth rate over the past 50 years, reaching 38.4 million tons in 2018

Source: GPCA Analysis, 2019

Note: Included ammonia, urea, phosphorus fertilizers. Based on source

information from GPCA member companies


Growth was largely driven by…

Abundance of natural

resources..

Proximity to

key markets..

Favorable

demand growth..

Abundance of natural gas,

phosphate rocks and sulphur

Proximity to growth markets

and favorable supply chains

Rising population and steady

economic growth



The product portfolio has also evolved… Predominantly nitrogen based, the GCC fertilizer industry began diversifying in the early

2000s with the addition of phosphate fertilizers to its product portfolio

61.1% 56.1% 54.6% 55.6% 52.8%44.3%

38.9% 43.9% 45.4% 38.2% 39.9%

37.3%

13.1%3.5% 3.4%1.8% 1.1%

1.7%0.5%

1968 1978 1988

0.9%

1998 2018

38.4

2.7%

2008

2.6%

0.3 2.9 6.9 11.3 18.4

DAP

TSP

Ammonia

NPK

MAP

Urea

GCC Fertilizer Capacity by Products (share in total / million tons)


Note: Included ammonia, urea, phosphorus fertilizers. Based on source

information from GPCA member companies


And is now one of the largest product segments… GCC fertilizers is the second largest product segment in volume terms, but

represents the lowest product segment in value terms

47%

22%

15%

11%

Basic Chemicals,Intermediates

Value Added, Specialties,

Performance

FertilizersOthers

Polymers

5%

174.8 million tons

16%

8%

48%

27%

Fertilizers

Basic Chemicals,Intermediates

Polymers

Value Added, Specialties,

Performance

$84.1 billion

GCC Chemicals Capacity in 2018 GCC Chemicals Sales in 2018


Note: Based on source information from GPCA member companies


What is our global position?


Our global market share… large and growing steadily

Today the GCC represents 8% of global urea and 11% of global DAP

production capacity

61%

8%

8%

8%

6%

Asia and Oceania

E. Europe & C. Asia

GCC

North America

Africa

3%4%

West EuropeLatin America 2%

Central Europe

214.6 million tons

50%

11%

18%

17%

Asia and Oceania

Latin America

2%

E. Europe & C. Asia

2%

GCC

North America

Africa

West Europe

1%

Central Europe

Global Urea Capacity by Region (2017) Global DAP Capacity by Region (2017)

61.5million

tons

Source: IFA Production & International Trade,

GPCA Analysis, 2019


41%

16%

14%

14%

6%

GCC &West Asia

E. Europe & C. Asia

EU 28Others

East Asia

Africa

North America

3%4%

GCC Share in Global Urea Export (2017) GCC Share in Global DAP Export (2017)

39%

19%

17% 11%

10%

4%

Africa

East Asia

GCC & West Asia

E. Europe & C. Asia

North America

Others

West Asia, which comprises the GCC, accounts for 41% of global urea export and 19% of

global DAP export

22.1 million tons

7.8 million tons

Source: IFA 2017

Note: West Asia subregion refers to Arabian Gulf countries, Afghanistan, Syria and

Turkey

Our global export share… large and growing steadily


Our operational efficiency…

8380

70

75

80

85

90

95

100

105

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

81%

103%

Global

81%

99%

83%81%

99%

78%

86%

93%

80%

96%

80%

96%

80%

95%

80%

94% 95%

77%

GCC

Fertilizer Capacity Utilization % (GCC vs Global)

GCC producers outperform the world in fertilizer manufacturing efficiency

Source: IFA Production & International

Trade, GPCA Analysis, 2019


What is the industry’s future growth pattern?


The industry is expected to add 4.7 million tons..with phosphate fertilizers driving the majority of capacity additions

Ammonia21%

DAP64%

Urea15%

4.7million

tons

GCC Fertilizer Capacity Growth Forecast (million tons)

17.0

4.7

17.7

14.3 15.3

5.08.0

Urea

2018 Additions (2018-2028)

2028

Others

DAP

Ammonia

38.4

43.1

2.1 2.1




Capacity Growth by GCC Country… Country-by-country breakdown will remain stable, with only modest market share gains by

Saudi Arabia and Oman

GCC Fertilizer Capacity Growth Forecast (million tons)

43%

26%

13%

11%

Saudi Arabia

Qatar

Oman

UAE 2%

Bahrain

48%

23%

19%

8%

Saudi Arabia

2%

Qatar

Oman

UAE Bahrain

38.4million tons

43.1million tons

Increase in market share

Decrease in market share

+ 5%+ 6%

- 3%

- 3%



2018 2028


A changing export landscape


The impact of China’s self-sufficiency on exports… Fertilizers was previously the main export product from the GCC to China, but as China

targeted self-sufficiency this trade structure virtually disappeared

55.9%71.4%

60.1%

22.7%

43.9%27.6%

37.9%

75.4%Fertilizers

1.2%

1.6%

0.3 MT

1992 1998 20172008

Polymers

PetrochemicalIntermediates

0.6 MT 4.5 MT 16.2 MT

China’s Chemical Import from the GCC million tons / % share (1992-2017)

Fertilizers

Source: UN Comtrade 2019

Note: Based on reported imports by China


Turning challenges into Opportunity


Focus on growth in Africa..Development of new markets is critical for GCC fertilizer producers, particularly in Africa

where robust fundamentals are present for fertilizer market development

Fastest Growing

Population

40% of global population

growth by 2050

Consumption Growth

Government target

improvement of fertilizer

consumption

Natural resources

Availability of natural gas

and phosphate for new

projects



Capturing Opportunities..GCC producers have begun market penetration in the African market, establishing joint

ventures with fertilizer producers and investing in the fertilizer supply chain

Ma’aden acquired 85% in

Meridian Group to have a network

of operations in southern Africa

(Mauritius, Malawi, Mozambique,

Zimbabwe and Zambia)

Ma’aden acquired

African distribution

Company

(2019)

ADNOC Fertilizers

formed JV with OCI

(2019)

ADNOC fertilizers formed JV with

OCI’s producers in Egypt and

Algeria, making it the largest

nitrogen-based fertilizer company in

the Middle East and North Africa



Driving new growth


Maximizing value creation… Driven by products diversification and value addition, the industry is diversifying to

leverage the supply of phosphate rocks and niche-market in nitrogen-based products

2008 2010 2012 2012 2013 2018

Urea & Aqueous

Formaldehyde

100 KT

Oman Qatar Qatar

Melamine

60 KT

Oman Bahrain

Urea

Formaldehyde

64 KT

Sulfur

Bentonite

600 KT

Urea

Formaldehyde

7 KT


Saudi Arabia

Phosphate

Fertilizers

3 million tons


Building new R&D capabilities… To maximize value addition, the GCC industry is embarking on developing new local R&D

capabilities

Conducts applied research on

innovative techniques for

sustainable agriculture; finding

innovative ways to reduce water

and increase crop production per

unit area

Conducts research to identify

optimum combinations of fertilizer

blends, best suited for Qatari

climate, with the objective to

develop local agriculture

Greenhouse

Technology Center

(2018)

SABIC’s Estidamah

Sustainable Agri

Center

(2016)



Wave of mergers and consolidation… The region is leveraging capabilities and scaling operations, ensuring access to new

markets and customers

SABIC Agricultural Nutrient Investments (2018)

Sabic consolidates several companies: Al-Bayroni, Ibn Al-

Baytar, GPIC, MPC, MWSPC, SAFCO

Oman Oil Company Consolidation (2018-2020)

Oman Oil consolidates several companies: ORPIC, DRPIC,

OMPET, OOCEP, Salalah Methanol, SLPG, OXEA, OTI,

OMIFCO

ADNOC Fertilizers & OCI Joint Venture (2019)

ADNOC formed JV with Dutch entity OCI becoming the

largest producer in MENA


Thank you!

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Transformation of the GCC Fertilizer Industry: Past & Present...Transformation: A New Era for the...

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