February 15, 2017 at 10:50 (Fertilizers)
Fertilizer prices have been falling in the recent years causing an erosion in the fundamentals of the industry, to which is has responded consolidating.
PotashCorp (POT) and Agrium (AGU) announced a merger of equals expected to be completed by the middle of 2017 that would create the world’s largest crop-nutrient supplier with a market value of about $26 billion. For an understanding of the significance of this new enterprise compare with the market capitalization of Mosaic (MOS) of $8.9 billion or CF Industries (CF) of $5.6 billion.
PotashCorp Allan Potash Operations
This is a deal of giants. PotashCorp is the largest world fertilizer company by nutrient capacity (14.2 million tonnes p.a.) and they are a low-cost potash producer (in the recent quarter they outflanked competition with the lowest cost per ton at $127 of potash produced). Agrium is a leading global producer and marketer of agricultural nutrients with a 4% of the global production capacity of potash, a 2% of ammonia, a 1% of urea, and 1% of phosphate. Agrium’s retail unit buys 10 million tons of fertilizer annually. The combined company would control the majority of North America’s potash production and more than 30 percent of North American nitrogen and phosphate production.
Agrium Vanscoy Potash Operations
The new company will be a leader in the fertilizer industry with close to 20,000 employees and operations and investments in 18 countries. PotashCorp shareholders will own 52% of new company.
The merger will result in low regional market overlap as the majority of PotashCorp fertilizer assets are in the eastern half of the U.S., Agrium’s nitrogen and phosphate assets are concentrated in western North America. It is expected to generate up to US$500 million of annual operating synergies mainly from distribution and retail integration, production and SG&A optimization, and procurement.
The merger of the world’s largest fertilizer producer with the world’s largest ag-retailer is drawing the attention of the regulators and farmer groups.
Tuticorin-based Greenstar Fertilizers (GSFL) acquired its phosphoric acid capacity from SPIC and now they plan to double their 75,000 tonnes per annum nameplate capacity. The revamping program is expected to take 12 to 18 months to be completed. They also plan to create in the next three years an additional 15,000 tonnes ammonia storage facility and a 600,000 tonnes DAP production facility.
India’s current phosphoric acid capacity is slightly over two million tonnes P2O5 and it’s DAP capacity is over 3.5 million tonnes P2O5.
February 8, 2016 at 06:52 (Fertilizers)
Potassium is an essential plant nutrient and an essential nutritional requirement for both humans and animals, for which there is no effective substitute. Potassium is used to make fertilizer, biofuels, gunpowder, and various industrial chemicals. About ninety percent of potash is used for fertilizer manufacture. Potassium Chloride (KCl) is the most common source of potassium. The mineral plays a vital role in crop growth and helps plants resist cold and drought. Due to its high chlorine content, MOP is widely used in chlorine resistant crops such as wheat, rice, soya, maize, and pastures.
Potassium intake is also important in animal nutrition and milk production.
Potassium sulphate and potassium nitrate are the main non-chloride K fertilizers.
Potash reserves are concentrated in just a few areas: major producing regions include the FSU, North America, Germany, and the Dead Sea area.
Compared with other fertilizer nutrients, the potash industry is much consolidated, with Canada, Russia, Belarus and Germany accounting for more than 3/4 of world production. There are about twelve large potash manufacturers, most of them non-governmental owned.
Source: Agrium Fact Book 2014-2015
Potash changes are driven mainly by the demand of the global fertilizer industry, in particular the Indian and the Chinese one, but also by the growth of the agrofuel production. The key crops influencing the potash price are first of all corn, and then soybeans and rice.
Potash Production Process
Urea, N-P-K composition 46-0-0, is the most commonly produced and widely traded nitrogen product. It is estimated that 90 percent is used as fertilizer and the rest for industrial purposes. Synthesized from ammonia and carbon dioxide (CO2), urea is the only primary nitrogen product chemically classified as organic (because of its carbon content). Nitrogen is the most crucial and major nutrient element in plant growth. It is abundant in nature and enhances better yields. Because urea is produced from ammonia and carbon dioxide, which is a by-product of ammonia production, all urea plants are located adjacent to or in proximity to an ammonia plant.
China and India account for more than a half of urea output (as well as capacity), however, these two countries are the largest urea consumers, over half of it. In 2013, 44 percent of the urea fertilizer was consumed in East Asia, followed by South Asia, which took nearly a quarter of the product.
Urea, (Black Sea), bulk, spot, f.o.b. Black Sea (primarily Yuzhnyy) beginning July 1991; for 1985-91 (June) f.o.b. Eastern Europe
Wheat (US), no. 1, hard red winter, ordinary protein, export price delivered at the US Gulf port for prompt or 30 days shipment